Which of the following is considered the key determinant of the standard of living in a country?

• A. The country's government spending
• B. The country's inflation rate
• C. The country's population size
• D. The country's productivity

Answer: (D)

Verified step by step guidance

1. Understand the concept of 'standard of living,' which generally refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.
2. Recognize that the standard of living is closely linked to the amount of goods and services produced per person, which is a measure of productivity.
3. Recall that productivity is defined as output per unit of input, often measured as output per worker or output per hour worked.
4. Analyze why other options like government spending, inflation rate, and population size are not the key determinants: government spending affects the economy but does not directly measure output per person; inflation affects prices but not the actual production capacity; population size alone does not determine how much each person produces.
5. Conclude that the key determinant of the standard of living is the country's productivity because higher productivity means more goods and services are produced per person, leading to higher income and better living standards.