Explanation

Earnings growth is most likely to exceed GDP growth when the ratio of corporate profits to GDP is trending upward over time.

This relationship occurs because:

• When corporate profits are growing as a percentage of GDP, it means corporate earnings are growing faster than the overall economy
• An increasing profit-to-GDP ratio indicates that corporations are capturing a larger share of economic output
• If the ratio is trending upward, corporate earnings growth must be outpacing GDP growth
• Conversely, if the ratio is trending downward, corporate earnings growth is lagging GDP growth

This relationship is fundamental to understanding how corporate earnings growth relates to overall economic growth.

Correct Answer: C