November 25th, 2013
Macroeconomics Second Examination
While studying the subject of macroeconomics, there are two important conclusions. The first conclusion is when looking into the long term; the standards of living are determined by the country’s capability to produce goods and services. The second conclusion is seen in the short term when the goods and services that a country produces are influenced by aggregate demand. These conclusions work in tandem with each other in order to provide a country with a high standard of living and an economic surplus; that is why it is important to understand how these conclusions work in different situations to improve the economy. The differences of standard of living in countries around the world are surprising. The variation in the living standards throughout the countries is directly correlated with the countries productivity. Productivity is defined as the quantity of goods and services produced by after an hour of time a worker. In countries where workers produce larger quantities of goods, there is a higher standard of living demonstrated. In countries where workers prove to be less productive, the majority of workers endure a more inadequate lifestyle. Similarly, the growth rate of the average workers income is determined by the growth rate of the countries productivity.
The relationship between the standards of living of its citizens and a country’s productivity has profound implications for the public. In order for a country to increase the living standards of its citizens, the country must ensure the citizens wellbeing, education, and have the accessibility to the tools to produce goods and services. It is crucial for a country to be able to produce goods and services adequately so that the standards of living of its citizens can have a high standard of living.
Although the standard of living of its citizens is determined by the country’s productivity in the long run, the country’s productivity in the short run is influenced by aggregate