Economic Growth Enhances Choices and Revenues

Steps:

• Define economic growth as an increase in real GDP, reflecting higher production of goods and services.
• For individuals, growth expands output, providing more diverse products and improved living standards.
• For the economy, higher GDP raises incomes and transactions, increasing tax bases.
• Evaluate options against these effects to identify the accurate pair.

Why B is correct:

• Economic growth boosts real output per the GDP definition, increasing consumer variety via expanded production and government revenue through higher taxable income and activity.

Why the others are wrong:

• A: Growth reduces absolute poverty and may not cause inflation; it often stabilizes prices with productivity gains.
• C: Growth increases, not reduces, tax revenue due to broader economic activity.
• D: Growth typically lowers unemployment via job creation and raises, not reduces, living standards.

Final answer: B