Question

According to the U.S. Department of Labor, nonfarm labor productivity rose at an annualized rate of 0.9 percent in the second quarter of 2017 as hours worked and output per worker both rose at their fastest pace in 18 months. Compared to the same quarter in 2016, productivity increased at a rate of 1.2 percent, its best performance in two years., while unit labor costs fell at a rate of 0.2 percent. From 2007 to 2016, labor productivity increased at an average annual rate of 1.2 percent, well below its long-term growth rate of 2.1 percent from 1947 to 2016. This is an indication of a decline in the potential growth rate, blamed in part on a shortage of workers and low capital expenditure.
Source: Lucia Mutikani, "U.S. productivity rises in second quarter, keeps labor costs in check," reuters.com, August 9, 2017.

Refer to the Article Summary. In the second quarter of 2017, labor productivity in the United States rose at its fastest pace in 18 months. Labor productivity is important for an economy because an increase in labor productivity

Group of answer choices

will increase the labor force participation rate.

allows the average consumer to increase consumption.

will create short-run, but not long-run, economic growth.

will increase output and decrease wages in the long run.

Answer 1

Labor productivity is defined as real output per labor hour, and growth in labor productivity is measured as the change in this ratio over time. growth in labor productivity makes  workers to produce more goods and services than they would otherwise produce  for a given number of work hours. This growth in labor productivity, will impact such that economy is able to produce more goods and services for the same amount of work and thus over all consumption increases and improves standard of living will increase. It will make an average consumer to consume more which will happen due to increased labor income due to higher productivity, which will increase profits in business and revenue of states. The labor force participation rate is a measure of an economy’s active workforce. Industilisation and technological progress will lead to an increased labor productivity will lead to increase in labor participation.Industrialization tends to increase participation by creating employment opportunities in labor markets that attract people to leave household production. The economic growth is directly related to labor productivity and for a sustained growth an increasing labor prodcutivity is needed.