Which of the following is an indicator that economists use to measure how an economy grows?

• A. Gross Domestic Product (GDP)
• B. Consumer Price Index (CPI)
• C. Unemployment Rate
• D. Exchange Rate

Answer: (A)

Verified step by step guidance

1. Understand that economic growth refers to the increase in the production of goods and services in an economy over a period of time.
2. Recognize that economists use specific indicators to measure different aspects of the economy, such as growth, inflation, employment, and currency value.
3. Identify Gross Domestic Product (GDP) as the total market value of all final goods and services produced within a country in a given period, which directly measures economic output and growth.
4. Note that Consumer Price Index (CPI) measures changes in the price level of a basket of consumer goods and services, indicating inflation rather than growth.
5. Understand that Unemployment Rate measures the percentage of the labor force that is jobless and actively seeking employment, and Exchange Rate measures the value of one currency relative to another; neither directly measures economic growth.