Increases in the real per capita income of a country are most closely associated with increases in which of the following

A. Productivity B. The price level C. The money supply D. The labor force E. Tax rates

Solutions

Expert Solution

The correct answer is (A) Productivity.

An economy's rate of productivity growth is closely linked to the growth rate of its GDP per capita.

Option (b) is incorrect because an increase in price may only affect nominal values and not real values. For example, inflationary pressures.

Option (c) is incorrect as increase in money supply may also result in inflationary tendencies.

Option (d) is incorrect because increase in labor force because rapid population infact growth hinders the growth of income per capita.

Option (e) is incorrect since increase in tax rate decreases disposable income or real income.

Rahul Sunny answered 1 year ago

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