Answer to Question #206730 in Macroeconomics for Lila

Question

The job creation (i.e. increase in employment) is usually faster than the growth of total production in one economy.

Answer 1

Higher productivity in firms attracts more employment so as to increase labor, employees then earn wages which leads to higher spending. This leads to increased demand which makes the firms increase their output so as to meet the market demand. This then leads to faster growth of total production compared to job creation.