Productivity tends to

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Productivity tends to rise during expansions because businesses are hiring more workers to keep up with demand, and are investing more in capital equipment. This leads to increased efficiency and output per worker, as well as increased technological innovation. During contractions, however, businesses may lay off workers, cut back on investment, and reduce capacity utilization, which can lead to lower productivity. Therefore, although productivity may still rise over the long term, it tends to do so more slowly or even fall during contractions.

Productivity Tends to