Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 7: Q 16. (page 186)

How do gains in labor productivity lead to gains in GDP per capita?

Short Answer

Expert verified

Gains in labor productivity contribute to increases in GDP per capita since workers earn more as they generate more goods.

Step by step solution

01

Step 1. Defines worker productivity.

The value of goods and services produced by one hour of labor is calculated as worker productivity.

02

Increases in labor productivity translate into higher GDP per capita.

The total amount of products and services produced inside a country is divided by the total population of that country to calculate per capita GDP.

A rise in the standard of living is caused by an increase in labor productivity. This is due to the fact that as workers produce more things, their earnings rise. As a result, they'll have more disposable income at their disposal. As a result, workers will be able to consume more. As a result, the GDP per capita will rise.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Refer back to the Work It Out about Comparing the Economies of Two Countries and examine the data for the two countries you chose. How are they similar?

How are they different?

Education seems to be important for human capital deepening. As people become better educated and more knowledgeable, are there limits to how much additional

benefit more education can provide? Why or why not?

What do economists mean when they refer to improvements in technology?

Use an example to explain why, after periods of rapid growth, a low-income country that has not caught up to a high-income country may feel poor.

Explain what the Industrial Revolution was and where it began.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free