Economic growth is best measured by a sustained increase in which of the following?

• A. the consumer price index (CPI)
• B. the money supply
• C. the unemployment rate
• D. real gross domestic product (real GDP)

Answer: (D)

Verified step by step guidance

1. Understand that economic growth refers to the increase in the productive capacity of an economy over time, which is best captured by measuring output rather than prices or monetary factors.
2. Recognize that the Consumer Price Index (CPI) measures changes in the price level of a basket of consumer goods and services, which reflects inflation, not growth.
3. Know that the money supply indicates the total amount of money available in the economy, which can influence growth but is not a direct measure of it.
4. Understand that the unemployment rate measures the percentage of the labor force that is jobless and actively seeking work, which relates to labor market conditions but not directly to economic growth.
5. Identify that real Gross Domestic Product (real GDP) measures the total value of all final goods and services produced in an economy, adjusted for inflation, making it the best indicator of sustained economic growth.