Canada and Us

Research Proposal

Real Income Determination in Canada and the United States

Name: Barima Peprah Student ID #: 030320900 Course: Economics 381 Professor: Dr. Bill Marr th Date: 28 November, 2005.

Table of Contents

Introduction:………………………………….. Literature Review:……………………………. Theoretical Framework:………………………. The Hypothesis:………………………………. The Research Design:………………………… Data Collection:………………………………. Data Analysis:…………………………………. Appendix:………………………………………. Bibliography:…………………………………….

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Introduction

Real income is aggregate income (GDP) adjusted for inflation plus transfer payments in an economy during a period of time. It is made up of labor income which consists of all wages and salaries, as well as capital income which comprises of profits, interest and rent.

Real income is a very important economic indicator in determining the standard of living in an economy but has to be adjusted for population to provide a better measure of the standard of living. People in various societies are concerned about how many goods or services their income can give them rather than the amount of income they have. In times of sustained growth in the price level, prices of various goods and items tend to go up without the incomes of individuals going up. This makes their incomes now worth less than they were before the rises in prices. They are unable to buy the same amount of goods as they use to. Real income therefore gives the society an idea of what their incomes are worth in terms of goods and services.

Real income has also been one of the necessary driving conditions for countries to get involved in international trade. International trade theory states explicitly that countries involved in trade reap benefits. This has been an important aspect of productivity and economic development for countries all over the world. It has also proven to be one of the most successful forms of improving the general well being of...