Increases in real GDP are considered the best measure of increases in living standards, because they measure:
A) only increases in prices.
B) only increases in production.
C) both increases in prices and increases in production.
D) only increases in the cost of living.

Question

Quizplus · Accepted Answer

Increases in real GDP measure increases in the total production of goods and services in an economy, which is closely related to increases in the standard of living. Increases in prices alone (choice A) do not necessarily indicate an increase in living standards, as they may result from inflation. Increases in the cost of living (choice D) may be related to changes in prices, but they do not necessarily reflect changes in production. Therefore, the best choice is B - increases in production.

Increases in Real GDP Are Considered the Best Measure of Increases