QUESTION 2 (18 MARKS)

Suppose that in an economy 100 hours of labor work produce 160 units of output in year 1. In year 2, the hours of labor work are 120 and the units of output are 216. In year 3, the hours of labor work are 130 and the units of output are 260.

i)Calculate the "productivity" for all three years.(6 marks)

ii)Using year 1 as the base year, calculate the "productivity index" for year 2 and year 3.(4 marks)

iii)Using your answers in (ii), calculate the "rate of productivity growth" for year 2 and year 3.(8 marks)

show all the working steps.