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The phrase 'standard of living' here is meant to give an impression that Yugoslavia has been doing well but on other fronts there is a slight problem. Hence the 'but' and not 'and'.
The overall flavour of the sentence here determines the choice and not the semantic. _________________
Final decisions are in: Berkeley: Denied with interview Tepper: Waitlisted with interview Rotman: Admitted with scholarship (withdrawn) Random French School: Admitted to MSc in Management with scholarship (...