Question

#3.1

Reasons for the rise in productivity growth between 1995 and 2010 include the following, except

• the microchip and information technology.

• new firms and increasing returns in production.

• global competition.

• a decline in population.

Answer 1

3.1 Ans. The productivity growth in the US economy between 1995 to 2000 was mainly due to other factors except a decline in population.

During these phase, telecommunication sector developed significantly and thus improvement was seen countrywide in the network capacity and added services. With this growth, security sector also grew notably. development of Microchip was a result of exploitation of the information technology.

At that time competition was aggravated in the retail and wholesale sector due to productivity improvement as a result of technological progress. Technological progress increases productive capacity of the firm and this profit. Growth in profit attracted new firms in the market resulting in rise in competition.