Question

If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity a. rises but real GDP per person falls b. and real GDP per person rise. c. falls and real GDP per person rises. d. and real GDP per person fall.

Answer 1

Answer:

a. rises but real GDP per person falls

Explanation:

Gross domestic product is the total monetary value of output that is produced by an economy in a given period.

GDP increases as the income increases. This is because people have more money to spend on goods and services.

So if people are retiring they will earn pension that will be spent. This increases productivity of the economy.

However since the number of people working is reducing there will be a reduction in real GDP per person. Only few people are producing and output will be allocated to a large population many of whom are not working.