Suppose that over the past ten years productivity grew faster in Oceania than in Freedonia and the population of both countries was unchanged.Which of the following can we conclude?

Question

Quizplus · Accepted Answer

Productivity is a measure of economic output per unit of input. If productivity grew faster in Oceania than in Freedonia over the past ten years, it means that Oceania was able to produce more goods and services per unit of input (such as labor, capital, or technology) than Freedonia. If we assume that the population of both countries was unchanged, it means that Oceania was able to produce more output per person than Freedonia. Therefore, we can conclude that real GDP per person grew faster in Oceania than in Freedonia. However, we cannot determine whether real GDP per person is higher in Oceania than in Freedonia without more information. Similarly, we cannot conclude that the standard of living is higher in Oceania or that Oceania had a greater capital stock than Freedonia based on the information given.

Suppose That Over the Past Ten Years Productivity Grew Faster