The natural real GDP will ________ following a fall in energy prices because
A)rise;labor productivity increases.
B)fall;labor productivity declines.
C)rise;employment is more attractive relative to leisure.
D)A and C are both correct

Question

Quizplus · Accepted Answer

A fall in energy prices can lead to an increase in natural real GDP through both an increase in labor productivity (as energy costs decrease, making production more efficient) and making employment more attractive relative to leisure (as lower energy prices increase disposable income and potentially increase demand for goods and services, leading to more job opportunities).

The Natural Real GDP Will ________ Following a Fall in Energy