Question

The most recent report from the Department of Labor says: “Nonfarm business sector labor productivity growth was revised to 0.0 percent in the fourth quarter of 2017, as output increased 3.2 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2016 to the fourth quarter of 2017, productivity increased 1.1 percent, reflecting a 3.2-percent increase in output and a 2.1-percent increase in hours worked.” Is this result consistent with the historical breakdown of economic growth as discussed in the text? If so, is that good news? If not, is that good news? Explain your answers. detailed explanation please

Answer 1

Yes, the data presented above is consistent with the historical breakdown of economic growth. Productivity increase is given by the difference between the rate of growth of output and number of hours worked increased. The breakdown is according to the way mentioned in the text.

Yes, this is a good news for the economy because the figures mentioned above show an increase in productivity in the economy. The hours worked have increased by a smaller amount in 2016 as compared to 2014 yet the increase in total output is same. This means that workers are becoming more productive. An increase in productivity is good for the economy as it increases overall growth rate.