How does productivity explain the differences in standard of living across countries?
A) Productivity tends to be lower in countries with high population, and therefore in those countries standards of living are lower.
B) Productivity explains very little of the differences across countries in the standard of living.
C) Productivity explains some, but not most, of the differences across countries in the standard of living.
D) Productivity explains most of the differences across countries in the standard of living.

Question

Quizplus · Accepted Answer

Productivity is the main determinant of a country's standard of living. Higher productivity means that a country can produce more goods and services with the same amount of resources, leading to higher incomes and a higher standard of living for the population. Countries with high levels of productivity tend to have higher standards of living, while those with low productivity levels tend to have lower standards of living. While other factors such as population and natural resources can also impact the standard of living, productivity is the primary driver.

How Does Productivity Explain the Differences in Standard of Living