Due Detail Submission Grade When measuring a nation\'s standard of living, wheth

Question

Due Detail Submission Grade When measuring a nation's standard of living, whether comparing different nations or analyzing changes in one country over time, the most commonly used and accepted figure is real GDP per capital, which calculates the market value of final goods and services produced per person living in that country, adjusted for changes in price level over time. If a country hopes to increase its real GDP per capita and thus raise its population's standard of living, it must increase labor productivity, which is the quantity of goods and services that can be produced per hour of work. Why is it necessary for a nation's labor productivity to increase in order for its standard of living to improve?

Explanation / Answer

Productivity is the measure of performance of producing goods or services. Labor productivity is basically the quantity of goods or services produced in a given time period normally an hour. Standard of living is measured by the real GDP per capita which is GDP divided by the population. If the labor productivity is increased than the straight effect will be on the GDP of a country, it will increase. Now with the same labor the country is able to produce more goods or services. Even if there is no increase in the labor force with a higher productivity the country’s real GDP will increase thereby increasing the standard of living.

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