Suppose You Are Given the Following Information About Productivity Growth

question 24

Essay

Suppose you are given the following information about productivity growth and growth of capital per hour of work for two different time periods. How much of the slowdown in productivity was due to technological change? Is there anything the government could do to reverse this situation?
$$\begin{array} { | l | c | c } \hline & \begin{array} { c } \text { Productivit; } \\\text { Pruwth }\end{array} & \begin{array} { c } \text { Gruwth of } \\\text { copital per } \\\text { hourwindad }\end{array} \\\hline 1970 - 1995 & 4.5 \% & 6 \% \\\hline 1996 - 2015 & 3.3 \% & 7 \% \\\hline\end{array}$$

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Definitions:

Increase Demand

A rise in the quantity of a product or service that consumers are willing and able to purchase at a given price, usually due to factors like income growth, price decrease of the good, or changes in tastes and preferences.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various price levels.

Slopes Upward

Describes a line or curve on a graph that represents an increase in the variable on the y-axis as the variable on the x-axis increases, suggesting a positive relationship between the two variables.

Giffen Good

A product that experiences an increase in demand as its price rises, contrary to standard economic theory, due to its role as a staple good.