Question

Since 1970, the labor force participation rate for women has increased from 43.3% in 1970 to 56.9% in 2018. During the same period, real GDP increased from $4.715 trillion to $17.286 trillion. Are these two events related? Explain.

Answer 1

Since 1970, the labour force participation rate for women has increased from 43.3% in 1970 to 56.9% in 2018, and, during the same period real GDP has also increased. Therefore, we can say that increase in the participation rate for the woman has played a crucial role in increasing the real GDP because real GDP is adjusted for the inflation that means GDP has not increased just because of the prices. Also when there is an increment in the real GDP it implies that idle resources in the economy has utilised efficiently that helped in increasing the real GDP.