ECONOMIC ANALYSIS

Economic Analysis

Economic Analysis

Question # 1

Ans : a

Income per Capita is known to be a measure of the amount of money that is earned on an average scale per person in a particular region. It could be applied to cities, countries and is considered to be the means of the evaluation of the living conditions and standard of life in various different regions. To calculate it, the Total Personal Income of a region should be known. The formula applied is:

Income Per Capita (pci) = i/P

The i represents the total personal income of the population of a particular region and the P represents the total population of that same region. For example, if in UK in 2008 the total personal income of the population amounts £10,968,393,000,000 and its population is approx. 300,000,000. Then the per capita income would be:

Pci = £10,968,393,000,000 / 300,000,000

Thus, the per capita income is equal is £36,561.

Ans : b

The per capital Income which is often used as indicator of national wealth has some weaknesses associated with it. The first one is that the activity of economics does not result in monetary income ( such as artistry and homemaking) is not counted in the measurements of income per capita, although its effects vary with in different countries. Secondly, the measurement in the income distribution is not done accurately in the measurement of income per capital. This reflects that the elite class people can have an effect which is considered as dis proportionate on the economy. And lastly, different places have values because of the variation in the exchange rates. Thus, the comparisons between countries become in accurate. This would be more logical to use comparing the results of one particular country in different years, keeping in mind the controlled inflation.

Ans : c

The Income per Capita actually used to judge the health of a particular economy. It identifies certain factors, the most important being the standard of living with in a country or an economy. However, even when using the per capita income for different states, certain factors have to be kept in mind. It is commonly thought the reasons behind a country having poor per capita income involve differences in skills, technology, natural endowments including climate, land and natural disaster frequency, economic policies, stability of the political conditions, human rights, women's role in the workforce and many other phenomenon's. To study this in detail, economists begin by analyzing the production with in each of the countries. The considered the value of the total goods produced with in a country - real GDP - is an attribute to one of three major sources which are labor, capital and total productivity factor. The manner in which differences in the levels of these factors translate into differences in real GDP is determined through the aggregate production function.

Ans d:

The Human Development Index (HDI) is an index which is mostly used the UN and various NGOs for the ranking and the categorization of different countries by their development level (Fukuda-Parr, ...