In the long run, the most important source of increase in a nation's standard of living is a:

• A. increase in government spending
• B. rise in population
• C. expansion of natural resources
• D. growth in productivity

Answer: (D)

Verified step by step guidance

1. Understand the concept of a nation's standard of living, which is typically measured by real GDP per capita, reflecting the average income and well-being of individuals in the country.
2. Recognize that in the long run, sustainable increases in the standard of living depend on factors that affect the economy's ability to produce goods and services efficiently.
3. Analyze the options: increases in government spending, population growth, and expansion of natural resources can influence the economy but do not guarantee sustained improvements in productivity or living standards.
4. Focus on productivity growth, which means producing more output per unit of input (like labor or capital), as it directly raises real GDP per capita and thus the standard of living over time.
5. Conclude that the most important source of long-run increases in a nation's standard of living is growth in productivity, because it drives economic growth and improvements in income and well-being.