Assume that the hypothetical economy of Molpol has 10 workers in year 1, each wo

Question

Assume that the hypothetical economy of Molpol has 10 workers in year 1, each working 2,000 hours per year (50 weeks at 40 hours per week). The total input of labor is 20,000 hours. Productivity (average real output per hour of work) is $10 per worker Instructions: In parts a and b, round your answers to the nearest whole number. In part c, round your answer to 2 decimal places. a. What is real GDP in Molpol? 00:20:04 Suppose work hours rise by 1 percent to 20,200 hours per year and labor productivity rises by 4 percent to $10.4 b. In year 2, what will be Molpol's real GDP? c. Between year 1 and year 2, what will be Molpol's rate of economic growth? percent

Explanation / Answer

Real GDP of Molpoi =Total input of labour× productivity of labour=20000×$10=$200,000

Input of labour increase by 1% to 20200 and productivity increases by 4% to $10.4

Real GDP new=20200×$10.4=2020×$104=$210,080

Real Rate Growth=(210080-200000)/200000=5.04%

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