If average labour productivity decreases, real GDP per person:Group of answer choicesincreasesmay increase or decrease, depending on the change in the share of population employedremains constantdecreases
Question
If average labour productivity decreases, real GDP per person:Group of answer choicesincreasesmay increase or decrease, depending on the change in the share of population employedremains constantdecreases
Solution
If average labor productivity decreases, real GDP per person typically decreases. Here's why:
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Labor productivity is defined as the amount of goods and services that a worker produces in a given amount of time. It's a measure of economic performance.
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GDP (Gross Domestic Product) per person is a measure of the economic output that each person contributes. It's calculated by dividing the total GDP of a country by its population.
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If labor productivity decreases, it means that workers are producing less in the same amount of time. This could be due to a variety of factors, such as less efficient technology, lower skill levels, or less capital to work with.
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When workers produce less, the total output of the economy (GDP) also decreases. Since GDP per person is calculated by dividing total GDP by the population, a decrease in total GDP would also lead to a decrease in GDP per person.
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Therefore, if average labor productivity decreases, real GDP per person also decreases.
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