Answer the following questions on the basis of the three sets of data for the country...

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b. Assuming no change in hours of work, if real output per hour of work increases by 20 percent, what will be the new levels

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Answer 1

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Increase in real output per worker will increase the production capacity of the economy by 20 percent. Therefore, real GDP at each price level increase by 20 percent.

Price level of 110 = 280 + 56 = 336

Price level of 100 = 255 + 51 = 306

Price level of 95 = 230 + 46 = 276

Price level of 90 = 205 + 41 = 246

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