Improvements in labor productivity
A) affect the level of wages, but do not affect the rate of economic growth.
B) affect the level of profit, but do not affect the rate of economic growth.
C) hinder economic growth, because they cause unemployment.
D) contribute to economic growth.

Question

Quizplus · Accepted Answer

Improvements in labor productivity lead to an increase in output without an increase in input, which leads to economic growth. More output means more goods and services can be produced and sold, leading to higher economic activity and a stronger economy. This can lead to increased profits for firms, which can eventually lead to higher wages for workers. While there may be temporary displacement of workers in industries with significant productivity increases, overall economic growth can create new job opportunities in other sectors.

Improvements in Labor Productivity