Out of the following economic statistics, which is the best measure of economic prosperity ?

a. The price level
b. The level of real GDP
c. The level of nominal GDP
d. The growth rate of real GDP

1 answer

The best measure of economic prosperity among the options provided is b. The level of real GDP.

Real GDP accounts for inflation and provides a more accurate reflection of the economy's size and the standard of living compared to nominal GDP. It indicates the total value of all goods and services produced in an economy, adjusted for price changes over time, thereby offering a clearer view of economic well-being and prosperity.

While the growth rate of real GDP (option d) gives insights into how quickly an economy is expanding, it does not directly measure the overall level of prosperity at a specific point in time. Options a and c (price level and nominal GDP) are less effective for measuring prosperity due to their limitations regarding inflation and output adjustments.