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

[cookcarl]

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]

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

[cookcarl]

YES! Correct, THANKS for helping me on my review

[kswal303]

Gracias!