1. Suppose an economy's real GDP is $5,000 billion. There are 125 million workers, each working an average of 2,000 hours per year.

a.What is the labor productivity per hour in this economy?

b.Suppose worker productivity rises by 5% over the following year and the labor force grows (work hours rise) by 1%. What is the projected value of real GDP?

c. Based on your previous answer, what is this economy's rate of growth?

1. For three years, there was no technological change in Longland but capital per hour of labour increased from $10 to $20 to $30 and real GDP per hour of labour increased from $3.80 to $5.70 to $7.13. Then, in the fourth year, capital per hour of labour remained constant but real GDP per hour of labour increased to $10. Does Longland experience diminishing returns?