Assume an economy experiences, for a given period, a 1% increase in output and a 5% increase in productivity. Given this information, we know that which of the following occurred for this economy during this economy?
A) Employment has decreased during this period.
B) Employment has increased during this period.
C) Employment has not changed during this period.
D) Employment initially decreased then increased during this period.
E) The effects on employment are ambiguous.

Question

Quizplus · Accepted Answer

If productivity increases by 5% but output only increases by 1%, it means less labor was needed to produce more efficiently. Therefore, employment likely decreased.

Assume an Economy Experiences, for a Given Period, a 1