Question

# Year Quantity of Labor Productivity of Labor 1 2,000 \$200 2 2,000 210 3 2,000 210...

 Year Quantity of Labor Productivity of Labor 1 2,000 \$200 2 2,000 210 3 2,000 210

The table shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour) in a hypothetical economy in three different years. Between Year 2 and Year 3, real GDP increased by

• 5 percent.

• 2 percent.

• 10 percent.

• 15 percent.

Solution: None of the answers is correct

Explanation:

 Year Quantity Productivity Real GDP 1 2,000 200 400000 2 2,000 210 420000 3 2,000 210 420000

Formulas used: Real GDP = Productivity of Labor x Quantity of labor

There is no change in real GDP in year 2 and 3 thus none of the answer is correct.

If we assume that quantity produced in Year 3 is 2200 there will be 10% increases computed as below:

 Year Quantity Productivity Real GDP 1 2,000 200 400000 2 2,000 210 420000 3 2,200 210 462000

(462000 - 420000) / 420,000 * 100 = 10%