According to economic reasoning, if labor productivity increases by 3 percent per year,

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Quizplus · Accepted Answer

Labor productivity refers to the amount of output that can be produced with a given amount of labor. If labor productivity increases by 3 percent per year, it means that workers can produce 3 percent more output per hour of work. This should lead to an increase in real wages, as firms will be able to afford to pay their workers more due to the increased productivity. However, it does not necessarily mean that the number of jobs will increase or that the price level will increase or decrease by 3 percent per year. Similarly, it does not necessarily mean that nominal wages (i.e. wages measured in current dollars) will increase by 3 percent per year.

According to Economic Reasoning, If Labor Productivity Increases by 3