What is the economic impact of increase in productivity of firms ?

Options

A. Decrease in Gross Domestic Product
B. No change in Gross Domestic Product
C. The impact may vary among nations and their economic conditions
D. Increase in Gross Domestic Product

Answer

D

Explanation

Productivity is a measure of the efficiency with which a firm combines capital and labour to produce more with the same level of factor inputs. It is closely linked to the growth rate of Gross Domestic Product (GDP). Increases in productivity allow firms to produce greater output for the same level of input, earn higher revenues, and ultimately generate higher GDP.