Question

If the world's population is growing by 1 percent a year.

Answer 1

Answer:

Explanation:

a )

Standard of living is calculated as follows

Standard of living = Real GDP / Population

Growth in standard of living = growth in real GDP - growth in population

Now given growth in standard of living = 0

0 = growth in real GDP - growth in population

growth in real GDP = growth in population

growth in real GDP = 1%

Therefore, to keep living standards from falling,  production have to increase by 1 %.

b )

If workforce increases by 1 % ,  that means population increases by 1 % and

productivity ( MPP ) increases by 1 %  that means GDP increases by 1 %

Hence

Growth in standard of living = 1 % -  1 % = 0

The living standard will remain stagnant .