Question

Following a long period of slow​ growth, the government of country X decided to open its economy and reduce trade barriers in order to boost economic growth. This provided the expected impetus to the economy as competition increased and the efficiency of domestic firms improved. A decade after opening the​ economy, the​country's GDP is now growing at an average of​ 7-8 percent annually. A group of economists claim that the standard of living of the people has improved substantially during this period. They also expect this impressive growth to continue over the next five years. Which of the​ following, if​ true, will indicate that the standard of living has actually improved since the economy was​opened?
A. Discretionary spending by domestic consumers increased during this time.
B. The government pegged its currency to a foreign currency three years back.
C. Overall exports increased because of a fall in domestic consumption during this period.
D. Country​ X's leading trading partner reported a fall in the standard of living over the last two years.
E. High interest rates have attracted a large amount of foreign investment over the last five years.

Answer 1

Answer:

A. Discretionary spending by domestic consumers increased during this time

Explanation:

Standard of living measures the level of wealth, well being and comfort of people in an economy.

The discretionary spending of consumers in country X increased - this indicates that disposable income increased and wealth must have increased too. Also the level of comfort would increase if discretionary spending increased.