There is a rise in labor productivity in the economy.As a result,in the short run Real GDP __________ and the price level __________.
A) rises; falls
B) falls; rises
C) falls; falls
D) rises; rises
E) remains constant; remains constant

Question

Quizplus · Accepted Answer

A rise in labor productivity means that workers can produce more goods and services per hour of work. This increase in efficiency typically leads to an increase in Real GDP because more goods and services are being produced. At the same time, the increase in supply of goods and services tends to put downward pressure on prices, leading to a fall in the price level in the short run.

There Is a Rise in Labor Productivity in the Economy