Labor productivity and GDP 1. The following table shows data for a hypothetical economy in 2006 and 2007. Use the table to answer the questions that follow. (Hint: When calculating growth rate for population use the following formula: Population Growth Rate=Population in 2007−Population in 2006Population in 2006×100Population Growth Rate=Population in 2007−Population in 2006Population in 2006×100. You will need to use similarly structured formulas for calculating growth rate of real GDP per person and the growth rate of labor productivity).

Calculate real GDP per person in 2006 and 2007 and enter the values in the previous table.
Calculate labor productivity in 2006 and 2007, and enter the values in the previous table. (Note: Enter your answer to the nearest penny.
Hint: Labor productivity is equal to real GDP divided by the number of hours worked, so the unit of measurement is dollars per hour.
2006 
2007 

Population 
400,000 
408,000 
Number of Hours Worked 
875,000,000 
875,000,000 
Real GDP 
$7,000,000,000 
$7,068,600,000 
Real GDP per Person 
=7000000000/400000 =17500 
=7068600000/408000 =17325 
Labor Productivity 
=7000000000/875000000 =8 
=7068600000/875000000 =8.0784 
The growth rate of the population between 2006 and 2007 : 408000400000/400000x100 = 2%
The growth rate of real GDP per person between 2006 and 2007 is : 1732517500/17500x100 = 1%
The growth rate of labor productivity between 2006 and 2007 is: 8.07848/8x100 = 1%
Assuming that real GDP per person is a good measure of living standards, between 2006 and 2007, living standards(declined) for which of the following reasons?
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