Author Question: Labor productivity is 20 per hour and aggregate hours are 400 billion hours. a. What does real ... (Read 82 times)

cookcarl · **on:** Jun 29, 2018

Labor productivity is 20 per hour and aggregate hours are 400 billion hours.

a. What does real GDP equal?
b. Because of technological advances, labor productivity doubles to 40 per hour. Furthermore, assume that aggregate hours decrease to 300 billion hours. What does real GDP equal?

Question 2

Fill in the blank: If a rent control were set at 200 below the market clearing rent on apartments, a ________ would tend to occur.

A) fall in demand
B) surplus
C) rise in demand
D) shortage

elyse44 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

a. Real GDP equals (labor productivity aggregate hours) = (20 per hour 400 billion hours) = 8 trillion.
b. Real GDP now equals 12 trillion.

Answer to Question 2

D