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Chapter 21: Problem 3

What two key factors cause labor productivity to increase over time?

Short Answer

Expert verified
Two key factors that cause labor productivity to increase over time are technological advancements and education and training.

Step by step solution

01

Identify Factor 1

The first key factor in increasing labor productivity over time is technological advancements. Technological advancements can greatly increase labor productivity. They allow workers to complete tasks more efficiently and effectively, often reducing the time it takes to complete certain tasks and improving the quality of the products or services produced.
02

Identify Factor 2

The second key factor in increasing labor productivity over time is education and training. It prepares workers for the tasks they will be performing and it is crucial in helping workers adapt to new technologies and workplace procedures. The more knowledgeable and skilled the workers are, the more productive they can be.

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Most popular questions from this chapter

(Related to the Apply the Concept on page 710 ) India's labor force has been gradually shifting out of the low-productivity agricultural sector into the higherproductivity service and industrial sectors. a. Briefly explain how this shift is affecting India's real GDP per capita. b. Is this shift likely to result in continuing increases in India's growth rate in coming decades? Briefly explain.

An article in the Economist noted that "for 60 years, from 1770 to 1830 , growth in British wages, adjusted for inflation, was imperceptible because productivity growth was restricted to a few industries." Not until the late nineteenth century, when productivity "gains had spread across the whole economy," did a sustained increase in real wages begin. Why would you expect there to be a close relationship between productivity gains and increases in real wages?

Use the following table to answer the questions. $$ \begin{array}{c|c} \hline \text { Year } & \text { Real GDP (billions of } 2009 \text { dollars) } \\ \hline 1990 & \$ 8,955 \\ \hline 1991 & 8,948 \\ \hline 1992 & 9,267 \\ \hline 1993 & 9,521 \\ \hline 1994 & 9,906 \\ \hline \end{array} $$ a. Calculate the growth rate of real GDP for each year from 1991 to 1994 . b. Calculate the average annual growth rate of real GDP for the period from 1991 to 1994 .

Briefly explain whether you agree with this statement: "Real GDP in 2016 was \(\$ 16.7\) trillion. This value is a large number. Therefore, economic growth must have been high during \(2016 . "\)

What is potential GDP? Does potential GDP remain constant over time?
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