Answer to Question #98801 in Macroeconomics for Shafiqah

Question

1. Can employee productivity decline even if there is an increase in total output? Explain.

2. In Malaysia, prices were higher in 2018 compared to prices in 1980. Does this mean that the quality of life of Malaysians was much better in 1980? Do you agree? Give your reasons

Answer 1

1. No, average labor productivity cannot fall if total output is rising. With constant average productivity, the labor force increases, but employment increases more slowly than unemployment. With falling average productivity, the labor force increases, and unemployment increases faster than employment.

2.The quality of life in 1980 was better than it was in 2018. From 1980-2018 the cost of living increased which disadvantages the middle class and low class leading to low saving among individuals