What Is Productivity?

What is the relationship between productivity, economic growth and monetary policy?

• Ok so I understand that productivity is the amount of output a worker can produce in an hour, so the more a worker can produce the more goods and services the economy can provide which leads to a higher standard of living and monetary policy comes in because when inflation is low it stimulates spending and investment which increases productivity which stimulates economic growth Am I right?? Also what are some recommendations brought forward by the central bank to enhance productivity???

• Answer:

  Yes, you are right. But don't forget inflation in dealing with monetary policy: http://pages.stern.nyu.edu/~nroubini/NYT/krugeconairu.htm http://delong.typepad.com/sdj/2010/10/hoisted-from-the-archives-delong-1999-should-we-fear-deflation.html