If Real GDP Increases Over Time,the Cost of Living Will

question 111

Multiple Choice

If real GDP increases over time,the cost of living will

• A)always remain constant.
• B)always decrease.
• C)always increase.
• D)either remain constant or increase.
• E)More information is needed to determine how the cost of living changes.

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Definitions:

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service.

Iced Tea

A chilled form of tea, often sweetened and served with ice, popular as a refreshing beverage.

Budget Constraint

The limitations on the consumption bundles that a consumer can afford given their income and the prices of goods.

Consumption Possibilities

The set of all consumption bundles that can be consumed given a consumer’s income and prevailing prices.