As a Country's Economy Grows and Real GDP Per Capita

question 72

Multiple Choice

As a country's economy grows and real GDP per capita rises, citizens often do not feel proportionately better off. Which statement provides a logical explanation for this?

• A) GDP may be rising due to rising prices rather than rising output.
• B) If the consumption portion of GDP is rising more rapidly than other categories of GDP, the average person may have less to consume.
• C) As incomes rise, households may use the extra income to buy services and goods that they used to produce for themselves; thus, even though GDP is higher, how much they actually consume is not higher.
• D) If the rise in output is due to an increase in the population, then the amount of goods available per person may not be rising.

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Definitions:

American Republic

A form of government in the United States characterized by a system of democracy with elected representatives, a president, and a separation of powers.

National Government

The government of a nation-state, responsible for administering and governing a country's affairs.

Legislature

A governmental body primarily responsible for enacting laws, consisting of elected representatives.

Rules Committee

A committee within a legislative body responsible for determining the terms and conditions under which legislation will be considered, including debating time and amendment allowance.