How do living standards in Canada compare with past living standards?

How does Canadian economic performance compare with that of other countries?

Per Capita GDP helps answer these questions GDP Per Person

8.2 GDP & Living Standards

Prices change over time, so per capita GDP must be adjusted to compare different times

Real GDP GDP expressed in constant dollars from a given year

(2002 is currently the reference year) From this, we can also derive a per capita real GDP

(per person)

Inflation Adjustment

To compare various countries’ per capita GDP we must adjust for different currencies

Do this by expressing all countries’ GDPs in one currency Standard is the American Dollar

Exchange Rate Adjustment

Non-market activities Housework, unpaid child care – things outside the

marketplace Underground economy

Smuggling, “under-the-table” transactions – all market transactions that go unreported

Excluded Activities

GDP doesn’t take into account: Product Quality – technology has risen a lot with

quality Composition of Output – tells us nothing about

what is produced and purchased (e.g. military or education based?)

Income Distribution Leisure – most people see leisure as a requirement

for a satisfactory standard of living; it is not sold/bought in the market

The Environment – doesn’t differentiate between economic activities that are harmful to the environment and those that are not

Limitations of GDP Calculation