Suppose that in year 1 every adult in the country works 40 hours a week and GDP is $6.7 trillion.In year 2 every adult in the country works 45 hours a week and GDP is $7.5 trillion.Which of the following statements is true?
A) Per-capita GDP is necessarily higher in year 2 than year 1.
B) People are "better off" in year 2 than in year 1 because there are more goods and services in year 2 than year 1.
C) Government transfer payments were higher in year 2 than in year 1.
D) a and b
E) none of the above

Question

Quizplus · Accepted Answer

The increase in GDP from year 1 to year 2 does not necessarily mean per-capita GDP is higher or that people are "better off," as it doesn't account for the increased hours worked or how the GDP is distributed among the population. Statement C about government transfer payments is unrelated to the information provided.

Suppose That in Year 1 Every Adult in the Country