If the working-age population in an economy shrinks, real GDP can still grow if
A) work hours per week decreases, to spread work among more workers.
B) labor productivity increases rapidly enough.
C) consumption by households increases rapidly.
D) spending by ﬁrms and the government increases.

Question

Quizplus · Accepted Answer

If the working-age population shrinks, the number of workers available to produce goods and services decreases. However, if each worker becomes more productive (i.e. produces more output per hour of work), the total output of the economy can still increase. This is why labor productivity is the best choice for real GDP growth in this scenario.

If the Working-Age Population in an Economy Shrinks, Real GDP