Over time, GDP may increase as the result of either (i) expansion in the quantities of goods produced or (ii) higher prices. Which of the following is true?
A)(i) will generally increase living standards, but (ii) will not.
B)(ii) will generally increase living standards, but (i) will not.
C)Both (i) and (ii) will generally increase living standards.
D)Neither (i) nor (ii) will generally increase living standards.

Question

Quizplus · Accepted Answer

An increase in the quantity of goods produced (i) typically leads to higher living standards as more goods and services are available. Higher prices (ii) do not increase living standards as they may lead to inflation without an increase in real output.

Over Time, GDP May Increase as the Result of Either