Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million. Which of the following is the best measure of labour productivity in this economy?
A)real GDP per employed worker = $20
B)real GDP per hour worked = $200
C)real GDP per hour worked = $20
D)real GDP per employed worker = $200
E)indeterminable from the information provided.

Question

Quizplus · Accepted Answer

Labor productivity is calculated as real GDP per hour worked. Therefore, the best measure of labor productivity in this economy is real GDP per hour worked, which is option B. Option A measures labor productivity as real GDP per employed worker, which does not take into account the number of hours worked by each worker. Option C measures labor productivity as real GDP per hour worked but with an incorrect calculation. Option D measures labor productivity as real GDP per employed worker but with an incorrect calculation.

Consider a Small Economy with Real GDP of $1 Billion