The reason why small changes in productivity growth rates have large long-term effects on economic growth over the long run is that
A)lower productivity growth makes labor discouraged,compounding the problem
B)lower productivity growth effects on the economy are compounded over the years,leading to large cumulative effects
C)when the productivity growth rate falls,output actually falls
D)lower productivity growth for one resource means lower productivity growth for all resources
E)output usually falls when productivity grows

Question

Quizplus · Accepted Answer

Lower productivity growth rates have a compounding effect on the economy over time, leading to large cumulative effects. This is because small changes in productivity growth rates affect not only current output, but also future output, since productivity growth compounds over time. As a result, even small differences in productivity growth rates can have significant long-term effects on economic growth.

The Reason Why Small Changes in Productivity Growth Rates Have