If real GDP falls by 2% while work hours fall by 10%,then labor productivity:

Question

Quizplus · Accepted Answer

Labor productivity is calculated as real GDP per hour worked. In this scenario, if real GDP falls by 2% but work hours fall by 10%, it means that the decrease in output is much less than the decrease in work hours. This implies that workers are producing more real output per hour worked, which is an increase in labor productivity. Therefore, the correct answer is C) rises.

If Real GDP Falls by 2% While Work Hours Fall