Real GDP Can Increase Either Because the Quantity of Labor

question 10

Essay

Real GDP can increase either because the quantity of labor increases or because labor productivity increases.What is the effect on the standard of living if real GDP increases because
a.the quantity of labor increases?
b.labor productivity increases?

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Definitions:

Total Cost Method

A method of inventory valuation where the total cost of goods available for sale is allocated to the cost of goods sold and ending inventory.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or appreciation, including stocks, bonds, real estate, and more.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is contributing to covering fixed costs and generating profit.

Machine Hours

Machine hours measure the total operation time of machinery within a production process, often used as a basis for allocating overhead costs.