If Average Labour Productivity Decreases While the Population and the Number

question 63

Multiple Choice

If average labour productivity decreases while the population and the number of employed workers remain constant,then total output

• A) increases.
• B) decreases.
• C) remains constant.
• D) may increase or decrease.
• E) cannot be determined.

---

Definitions:

Full Employment GDP

Refers to the maximum level of output that an economy can produce without causing inflation, when unemployment is at its natural rate.

Equilibrium GDP

Equilibrium GDP is the level of real GDP where aggregate demand equals aggregate supply, indicating a state of economic balance without excess demand or supply.

Inflationary Gap

The difference between the actual output of an economy and the maximum potential output it could achieve with full employment of resources, leading to inflation.

Federal Debt

is the total amount of money that the government of the United States owes to creditors both domestic and foreign.