WI - Wealth Measure 11th by Ana Carla Hansen da Fonseca

PPP - Purchasing power parity

2024-03-06 15:20:17 UTC

Definition:

Basically speaking, PPP is a macroenocomic analysis meter that compare the economic status between countries. For example, it measures the price of determine product in to countries, and see if has a drastic change of the cost in same product.

Real Data / examples:

A litre of Coca - Cola in Brasil costs 5,79 reias and in USA cost 1,17 dollars so the PPP between Brasil and USA is 5,79/1,17, or 4,94.

It means that for every dollar spend on 1 litre of coca - cola in USA, 4,94 reais would have to be spend in Brasil to have the same quality and quantity.

Limitations:

Measuring the ppp is not as easy as you think, because it requires time and the costs are high, , long-term, complicated and comparatively inflexible because of impossibility to envisage and evaluate all particular events that could influence the future activity. That turns this analisys not that efficient.

Gross Domestic Product (GDP)

gustavosa0675 — 2024-03-07 16:58:11 UTC

Definition of GDP:

GDP looks at the production side of the economy, measuring the value of all final goods and services produced within a nation’s borders.

It includes both domestically produced goods and services and those earned abroad.

GDP can be calculated using three approaches: production (output), income, and expenditure.

Examples of GDP Components:

Consumption : Spending by households on goods and services ( food, clothing, housing).

Investment : Business spending on capital goods (machinery, equipment) and residential construction.

Government Spending : Expenditures by the government on public services, infrastructure, and defense.

Net Exports: The difference between exports (goods sold abroad) and imports (goods purchased from other countries).

Limitations of GDP:

Exclusion of Non-Market Transactions: GDP does not account for economic activity in the informal sector. These non-market transactions are not officially monitored or taxed, leading to an incomplete picture of economic activity.

Income Inequality: GDP does not consider income distribution. Even if a country has high GDP, it may still have significant income inequality.

Quality of Life and Well-Being: GDP was never intended to measure overall well-being. It leaves out aspects like pollution, happiness, and health.

Sustainability: Rapid GDP growth can deplete natural resources and harm the environment, affecting long-term well-being.

Depreciation of Capital: GDP accounts for new capital investment but doesn’t subtract the lost value of depreciated capital, potentially overstating economic activity.

Human Development Index (HDI): An alternative measure that considers health, wealth, and education, providing a more holistic view of development.

GNI: gross national income

2024-03-07 17:02:18 UTC

Definition:

GNI= GDP+NFFI

GDP is the total value of everything it produces in a certain amount of time, GDP is the biggest indicator of how big and healthy the economy is

NFFI is a measurement used in economics to represent the difference between the income a country's residents earn from foreign sources (like investments abroad) and the income that foreign residents earn within the country (like foreign companies operating there).

In simpler terms, it's the net income a country receives from its investments and businesses abroad, minus what it pays to foreign investors and businesses operating domestically.

Limitations:

So, the GNI is the GDP plus the the net income earned by the country's residents from abroad (NFFI), although the GNI measures the income of a country it can’t measure the common wealth because a big part of the

national income goes to the big enterprises and not to the ones who need.

Example:

GNI is used by the World Bank to categorize countries based on their income level, which then determines their eligibility for various development programs and aid initiatives.

poverty line

2024-03-07 17:03:12 UTC

The poverty line is not totally exact, because those who are above the line do not always live a life without difficulties.

The metric doesn’t take into account access to sanitations

In the United States, the poverty threshold for a single individual was $12,880 annually in 2020. Keeo in mind that these figures can be updated, and it’s advisble to chek the latesr dara from realiable sources for the most current information.

The poverty line is the threshold line that defines the minimum requirement of income required an individual to fulfil his basic necessities.