With fixed quantities of capital,land,and entrepreneurship and fixed technology,the amount of real GDP produced increases when ________ increases.
I.the quantity of labor employed
Ii.the inflation rate
Iii.the price level

Question

Quizplus · Accepted Answer

Real GDP is a measure of the value of goods and services produced in an economy, adjusted for inflation. The amount of real GDP produced will increase when the quantity of labor employed increases because this increases the total factor productivity (TFP) of the economy. TFP is a measure of the efficiency with which inputs (such as labor) are combined with fixed quantities of capital, land, and entrepreneurship to produce output. As labor increases, TFP increases and the economy can produce more output. The inflation rate and price level do not affect the amount of real GDP produced in the long run, as they are mainly short-term macroeconomic indicators.

With Fixed Quantities of Capital,land,and Entrepreneurship and Fixed Technology,the Amount