If Both Total Employment and Total Output Always Grew by 2

question 88

Multiple Choice

If both total employment and total output always grew by 2 percent each year,what would the annual growth in labor productivity in an economy be over a decade?

• A)0 percent
• B)2 percent
• C)10 percent
• D)20 percent
• E)2 percent times the size of the labor force

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Definitions:

Actual Price Level

The current index of prices for goods and services, reflecting inflation or deflation in an economy.

Short-run

A period in which at least one input is fixed while others can be varied to change the level of output.

Wage Rates

The standard amount of compensation a worker receives for labor, typically expressed per hour, day, or piece.

Sticky Downward

Describes prices or wages that are resistant to decrease even in conditions where economic theory suggests they should fall, contributing to slow adjustments in markets.