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Suppose Productivity Increases by 5% in Industry X and 2

Question 37

Multiple Choice

Suppose productivity increases by 5% in industry X and 2% in industry Y.Further suppose the demand for X has fallen while the demand for Y has increased.If economy-wide productivity and the average wage each rise by 3%,we should expect that:


A) output and employment in X will increase relative to Y
B) output and employment in X and Y will not change relative to one another,since wages will increase by 5% in X and 2% in Y
C) output and employment in Y will increase relative to X
D) no statement can be made concerning output and employment in either industry without more information

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