contestada

if the world's population is growing by 1 percent a year.

a. How fast does production have to increase to keep living standards from falling?
b. Will living standards rise, fall, or stay the same if the workforce and productivity (MPP) also increase by 1 percent each year?

Respuesta :

Answer:

Explanation:

a )

Standard of living is calculated as follows

Standard of living = Real GDP / Population

Growth in standard of living = growth in real GDP - growth in population

Now given growth in standard of living = 0

0 = growth in real GDP - growth in population

growth in real GDP = growth in population

growth in real GDP = 1%

Therefore, to keep living standards from falling,  production have to increase by 1 %.

b )

If workforce increases by 1 % ,  that means population increases by 1 % and

productivity ( MPP ) increases by 1 %  that means GDP increases by 1 %

Hence

Growth in standard of living = 1 % -  1 % = 0

The living standard will remain stagnant .

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