Suggested Answers of BT2 Revision Package - ASKnLearn

lower standard of living. This is especially true for developed economies where the birthrates seem to be at record low. However, on the other hand, it seems unlikely thatpopulation will decline at a rapid rate given the modern developments in healthcareservices, as evident by a low infant mortality rate worldwide.Second, prices could have fallen more than the fall in nominal income, resulting in a rise inreal income. This is especially applicable to the situation of a recession when the economymay face periods of deflation as well. It does not necessarily mean that SOL hasdeteriorated when real NY has fallen because real income of the people could haveincreased and they can buy more goods and services than before.In addition to the above quantitative aspects, improvements made in the qualitative aspectscan also bring about higher SOL. These include better quality of goods and services, shorterworking hours, better working conditions, a more politically and socially stable society andhigher quality of lifestyle, which cannot be inferred from the NY figure.The quality of goods and services consumed may have improved even though the NY hasdecreased. Such improvements in products and customer services help bring about a higherlevel of satisfaction which contributes to the well being of the society. For example, althoughNY of a particular country may have decreased, the consumers may still get to enjoy a widerrange and better quality of the goods like hand-phones and laptops etc as the producerscontinue to innovate in the hope of stimulating the economy. This is highly probable giventhe level of high competition in the market. When the level of consumption isdeclining, producers may seek to develop their products instead so that they canretain their market share.Standard of living can also improve if shorter working hours are implemented. For instance,5- day workweek for the civil service recommended by the Singapore government someyears ago has certainly help to improve the quality of life. In addition, quality of life can alsoimprove if the relevant authorities of the country ensure better working and living conditionsin terms of safety and cleanliness.Another aspect that can cause SOL to improve despite a lower NY is a moreenvironmentally friendly community and greener society. This can come about by a higherliteracy rate and society being more aware about green issues. In addition, with a betterenvironment, it helps increase life expectancy, bringing about higher quality of life.Regulation like clamping down on motorists emitting large amounts of fumes can alsohelp bring about a better environment.To conclude, a lower circular flow of income and expenditure does not necessarily mean alower SOL. This is because the figures fall short of being good indicator in measuring thequantitative aspect. In addition, the figures have neglected the qualitative aspect. Other