Which of the following best explains how a growing economy can generate positive feelings among its population?

• A. Economic growth guarantees that all prices will decrease.
• B. Increased economic growth often leads to higher employment and rising incomes, improving overall well-being.
• C. A growing economy means that government spending will always decrease.
• D. A growing economy always eliminates income inequality.

Answer: (B)

Verified step by step guidance

1. Understand the concept of economic growth: Economic growth refers to an increase in the production of goods and services in an economy over a period of time, typically measured by the growth rate of real GDP.
2. Recognize the effects of economic growth on employment: When an economy grows, businesses tend to expand, which often leads to the creation of more jobs and thus higher employment levels.
3. Consider the impact on incomes: With more employment opportunities and business expansion, average incomes tend to rise, which can improve the standard of living for many individuals.
4. Connect economic growth to overall well-being: Higher employment and rising incomes generally increase people's ability to afford goods and services, leading to improved satisfaction and positive feelings among the population.
5. Note that economic growth does not guarantee price decreases, reduced government spending, or elimination of income inequality; these are separate issues influenced by other factors.