U.S.labor productivity slowed during the 1970s because of i. increasing government taxes and regulations on production.
Ii) the necessity to cope with energy price increases.
Iii) inflation, which shortened the horizon over which businesses made their borrowing plans.

Question

Quizplus · Accepted Answer

All three factors listed in the statement contributed to the slowdown in U.S. labor productivity during the 1970s. Increasing government taxes and regulations on production added to the cost of doing business and reduced incentives for firms to invest in new technology and equipment, which could have improved productivity. Coping with energy price increases required firms to devote more resources to managing their energy consumption, which also reduced their ability to invest in productivity-enhancing measures. Inflation made it difficult for firms to plan for the future since they had less certainty about the value of money over time, which again reduced the incentives for firms to invest in productivity-enhancing measures.

USLabor Productivity Slowed During the 1970s Because of I