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INDUCED GOVERNMENT PURCHASES: Government purchases that depend on income or production (especially national income or gross national product). An increase in national income triggers an increase in induced government purchases. Induced government purchases is graphically depicted as the slope of the government purchases line and is measured by the marginal propensity for government purchases. The induced relation between income and government purchases, as well as other induced expenditures, form the foundation of the multiplier effect triggered by changes in autonomous expenditures.
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                           COST OF LIVING: The amount of income or money needed to acquire a given quantity of goods and services or to achieve a given living standard. This cost of living notion is closely intertwined with inflation, the economy's price level, and the concept of purchasing power. The cost of living is typically indicated by a price index such as the Consumer Price Index (CPI). The CPI, for example, measures the changing cost of a specific market basket of goods. An increase in the CPI indicates that the cost of this market basket has increased, and presumably so too has the cost of living. In fact, labor union wages, benefits paid to Social Security recipients, and similar income sources are regularly adjusted for changes in the cost of living using the CPI.Over the decades, the cost of living generally has been in the upward direction, the result of persistent inflation. The cost of living today is greater than it was a decade back. This means, quite simply, that to achieve the same living standard today as ten years ago, then more income or money is needed. Fortunately incomes and the amount of money in the economy have also both increased. For most people these increases have been greater than inflation and the cost of living. In addition, technological advances have improved the quality of goods and services that people buy. While it might cost more to buy a car today than ten years ago, that car is better built, safer, and more comfortable. Unfortunately, some people focus exclusively on the price side of the cost of living without fully recognizing the income side. If prices rise by 10 percent and incomes rise by 20 percent, then the cost of living is certainly higher, but the means of achieving a given living standard is actually easier. While some might fondly recall those "good ol' days" when "a candy bar cost a quarter," income was also less. An increase in the price of a candy bar (say from 25 cents to 50 cents) certainly indicates a higher cost of living, but an increase in hourly wages (say from $2 to $10) more than compensates for the higher price. The ability to make the purchase is substantially greater. Not only does the cost of living change over time, it also varies from place to place. As a general rule, the cost of living tends to be higher in bigger cities than smaller towns, and lower still in rural areas. It also tends to be higher in some states, like New York and California, than in others. Part of this is based on quality differences that should be, but often are not, captured by cost of living measures. For example, it might very well "cost" more to live in large urban areas, but residents also have access to a greater variety of goods, some of which (opera, museums, professional sports) are not available in smaller towns.
Recommended Citation:COST OF LIVING, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2026. [Accessed: March 12, 2026].
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Today, you are likely to spend a great deal of time calling an endless list of 800 numbers trying to buy either a looseleaf notebook binder or hand lotion, a big bottle of hand lotion. Be on the lookout for telephone calls from long-lost relatives.
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Woodrow Wilson's portrait adorned the $100,000 bill that was removed from circulation in 1929. Woodrow Wilson was removed from circulation in 1924.
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"Expect people to be better than they are; it helps them to become better. But don't be disappointed when they're not; it helps them to keep trying." -- Merry Browne, Author
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SIC
Standard Industrial Classification
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