If the economy grew at 3% this year and average prices increased _____, people would be better off this year than last year.

Question

Quizplus · Accepted Answer

If the economy grows by 3% this year and the average prices increase by less than 3%, people would be better off this year than last year. This means that the real GDP has increased, which is a good sign for the economy, and if the prices have not increased at the same rate, then the purchasing power of the population has also increased. However, if the average prices increase faster than the GDP growth rate, then people would not be better off as inflation would reduce their purchasing power, and if the average prices increase by more than 10%, it would be a sign of hyperinflation, which is harmful to the economy.

If the Economy Grew at 3% This Year and Average