$$\begin{array} { | c | c | c | }
\hline \text { Year } & \text { Quantity of Labor } & \text { Productivity of Labor } \
\hline 1 & 2,000 & \$ 200 \
\hline 2 & 2,000 & 210 \
\hline 3 & 2,000 & 210 \
\hline
\end{array}$$ The table shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour) in a hypothetical economy in three different years. Between Year 1 and Year 2,
Real GDP increased by
A) 1.5 percent.
B) 2.5 percent.
C) 5.0 percent.
D) 6.0 percent.

Question

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Quantity of Labor } & \text { Productivity of Labor } \
\hline 1 & 2,000 & \$ 200 \
\hline 2 & 2,000 & 210 \
\hline 3 & 2,000 & 210 \
\hline
\end{array}$$ The table shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour) in a hypothetical economy in three different years. Between Year 1 and Year 2,
Real GDP increased by
A) 1.5 percent.
B) 2.5 percent.
C) 5.0 percent.
D) 6.0 percent.

Quizplus · Accepted Answer

The productivity of labor increased from $200 to $210, which is a 5% increase $(\frac{210 - 200}{200} \times 100\% = 5\%$). Since the quantity of labor remained constant at 2,000 hours, the entire increase in productivity directly translates to a 5% increase in real GDP.

The Table Shows the Quantity of Labor (Measured in Hours)