Question

Read the following scenarios, and then answer the question that follows. Scenario 1 In the past year, country X has seen factories close and GDP fall dramatically. As a result, many people have lost their jobs. Prices of basic goods have also risen significantly. Fewer students are enrolling in college because more unemployment means less money to pay for classes. Scenario 2 Country Y has seen its GDP increase steadily over the past 18 months, and more people have been getting jobs. Prices for items such as food and clothing have been stable during this period, and college enrollment is increasing as more people have jobs and can pay for school. How does the economic health of countries X and Y compare?

Answer 1

Answer:

Country X does not have a healthy economy. The prices for basic goods have increased. Fewer people in country X have jobs, and output has fallen along with the country’s GDP. These events have led to fewer people being able to afford college.  On the other hand, country Y has a healthy economy. Its output as shown by GDP is increasing. The prices are fairly stable in country Y. More people have jobs, and they have an opportunity for higher education.