A decline in long-term productivity implies that an economy requires more resources to produce goods; therefore, as costs of production rise, we should see an acceleration in inflation.

Question

Quizplus · Accepted Answer

If an economy requires more resources to produce goods due to a decline in long-term productivity, it can lead to higher costs of production. Higher production costs can increase the prices of goods, contributing to inflationary pressures.

A Decline in Long-Term Productivity Implies That an Economy Requires