If labor's share of national income is to remain constant,then ________.
A)the real wage must grow faster than labor productivity
B)the real wage must grow at the same rate as labor productivity
C)labor productivity must grow faster than the real wage
D)the combined growth rates of labor productivity and the real wage must equal the growth rate of national income

Question

Quizplus · Accepted Answer

If labor's share of national income is to remain constant, then the share of national income earned by capital (such as profits for businesses and returns on investments) must also remain constant. This means that the real wage (income earned by labor) must grow at the same rate as labor productivity (output per worker). This implies that the purchasing power of workers' incomes will increase over time, which can lead to higher living standards. If labor productivity grows faster than the real wage, then labor's share of national income will decline. If the combined growth rates of labor productivity and the real wage exceed the growth rate of national income, then labor's share of national income will increase.

If Labor's Share of National Income Is to Remain Constant,then