Which of the following best explains why economic growth is considered an important economic goal?

• A. Economic growth always leads to perfect income equality among citizens.
• B. Economic growth eliminates the need for government intervention in markets.
• C. Economic growth guarantees that inflation will remain at zero.
• D. Economic growth increases the standard of living by allowing more goods and services to be produced and consumed.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of economic growth. Economic growth refers to the increase in the production of goods and services in an economy over a period of time, typically measured by the growth rate of real Gross Domestic Product (GDP).
2. Step 2: Recognize why economic growth is important. It is considered an important economic goal because it generally leads to an increase in the standard of living, meaning people can access more goods and services than before.
3. Step 3: Analyze the incorrect options. Economic growth does not necessarily lead to perfect income equality, nor does it eliminate the need for government intervention or guarantee zero inflation.
4. Step 4: Focus on the correct explanation. Economic growth allows an economy to produce more goods and services, which can improve overall welfare and provide more opportunities for consumption and investment.
5. Step 5: Summarize the key takeaway. The best explanation for why economic growth is important is that it increases the standard of living by enabling more goods and services to be produced and consumed.