Question

If the average American makes $54,360 per year, and the average person from India makes $5,758 per year, is it fair to say that an Indian who makes $5,758 per year has everything an American has who makes $54,360 per year, and lives just as well? Why or why not?

Answer 1

Answer- It is certainly not fair to say the above mentioned statement as every country differs in different aspects. The standard of living of a person living in America is much different than what it is in India. Standard of living mainly refers to the goods, comfort level, wealth a person has in a particular geographical area. The major reason for such a difference in the paying level of an American job and an Indian job is due to different level of skills people have, the number of skilled people vs the jobs available etc. All these factors decide in the salary of a certain job. Also if the purchasing power of a currency in one country is different than the purchasing power of another country then also the standard of living may vary. One pace may also sell some goods that are cheaper than what is available in other countries as the labor might be cheap there and thus it could lead to consumption of such goods at lower prices. Thus, it is not correct to say the above as there could be many factors are different.