Answer:
Option D, might fall, but we cannot know without more information
Explanation:
Complete question
If real GDP falls by 2% while work hours fall by 10%, then labor productivity:
a. falls
b. is unchanged
c. rises
d. might fall, but we cannot know without more information
Solution -
As we know
Productivity is equal to Real GDP/ Total Hours Worked. This means that if working hours of the labor force reduces then the productivity will rise.
Here GDP also falls but compared to the total working hours the fall of GDP is 1/5. Hence, the productivity might fall/rise as compared to the case when neither the GDP nor the working hours were falling.
Hence, option D is correct
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