Answer to Question #59599 in Macroeconomics for ali

Question

Productivity/real values.
Percent change in wages = 8%.
Inflation = 3%.
What is the percent change in productivity?

Answer 1

Productivity = Wage rate/unit labor cost
Inflation influences both the wage rate and the unit labor cost in the same way.
Therefore productivity change will be directly dependant on the percent change in wages.