Cambridge International as and a level Economics Ebook

§
Russia
Egypt
Indonesia
South Africa
India**
80
Local currency under(–)/over(+) valuation
against the dollar, %
80
40
*At market exchange rates (Jan 22nd 2014)
†
Weighted average of member countries
‡
Average of four cities
§
Average of five cities
** Maharaja Mac
Sources
: McDonald's; 
The Economist
40
Big Mac price*, $
0
0.1
nil
–
+
7.80
7.14
5.25
5.01
4.96
4.63
4.62
4.47
3.76
2.97
2.74
2.62
2.43
2.30
2.16
1.54
230
Cambridge International A Level Economics

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Th
ere are also a number of composite measures, which 
include a number of indicators of living standards and 
economic development with weightings to give a single, 
combined fi gure. One of these is 
Measurable Economic 
Welfare (MEW).
Th
is was developed in 1972 by two 
American economists, William Nordhaus and James 
Tobin. Th
e measure seeks to give a fuller picture of living 
standards by adjusting GDP fi gures to take into account 
other factors that have an impact on living standards. 
Factors that improve living standards, including increased 
leisure time, are added to the GDP fi gure, while factors 
that reduce living standards are deducted. Of course, in 
practice, it is diffi
cult and expensive to measure the value 
of non-marketed goods and services.
Perhaps the best-known measure of economic 
development is the United Nation’s 
Human Development 
Index (HDI)
. Th
is takes into account GNI per head, 
education (as measured by mean years of schooling and 
expected years of schooling) and health care (as measured 
by life expectancy). Th
ese are included as it is thought that 
people’s welfare is infl uenced not only by the goods and 
services available to them but also their ability to lead a 
long and healthy life and to acquire knowledge.