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

Question

Quizplus · Accepted Answer

If the economy grew by 3% but prices increased by more than 3%, then the real purchasing power of individuals would be lower than the previous year. Therefore, prices would need to increase by less than 3% for people to be better off than the last year. Options A and B would both result in some level of inflation eroding the benefit of the economic growth. Option D of prices increasing by more than 10% is unrealistic and not mentioned as a possibility in the question.

If the Economy Grew at 3% This Year and Average