Question

Suppose that productivity growth in an economy over a two-year period has fallen to less than 2% per year, causing a severe recession. From the neoclassical view, which of the following will be more important in these circumstances?
a. an increase in the annual unemployment rate
b. supply and demand in the labor market
c. the problem of cyclical unemployment
d. the growth rate of long- term productivity

Answer 1

Answer: d. the growth rate of long- term productivity

Explanation:

From the question, we are informed that that the productivity growth in an economy over a two-year period has fallen to less than 2% per year, causing a severe recession. From the neo-classical view, the important things are

encouraging long-term growth, curtailing inflation.

Therefore, the growth rate of long- term productivity is the correct answer.