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Q: What is the economic impact of increase in productivity of firms?
  • A. Decrease in Gross Domestic Product
  • B. Increase in Gross Domestic Product
  • C. The impact may vary among nations and their economic conditions
  • D. No change in Gross Domestic Product
Correct Answer: Option B - Economic or GDP growth is caused by two main factors: (1) An increase in aggregate demand (AD) (2) An increase in aggregate supply (productive capacity) with growth in productivity, an economy produces and consumes more goods and services for the same amount of work.
B. Economic or GDP growth is caused by two main factors: (1) An increase in aggregate demand (AD) (2) An increase in aggregate supply (productive capacity) with growth in productivity, an economy produces and consumes more goods and services for the same amount of work.

Explanations:

Economic or GDP growth is caused by two main factors: (1) An increase in aggregate demand (AD) (2) An increase in aggregate supply (productive capacity) with growth in productivity, an economy produces and consumes more goods and services for the same amount of work.