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Chocolate_Pie Chocolate_Pie
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Fakeland has an aggregate production function Y = A. Last year, total output was USD 1000. This year, a storm hits Fakeland and destroys half of the country's total capital stock. On the other hand, improving education quadruples the average human capital of workers and there is a demographic boom that doubles the labor force. Assuming that there is no change to technology, what is TRUE of total efficiency units of labor and total output?

▸ Total efficiency units of labor stay the same; output is cut in half.

▸ Total efficiency units of labor is multiplied by 8; total output doubles.

▸ Total efficiency units of labor is multiplied by 3; total output doubles.

▸ Total efficiency units of labor double; output remains the same.
Textbook 

Macroeconomics


Edition: 3rd
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kraftykrafty
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Total efficiency units of labor is multiplied by 8; total output doubles.

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