Contemporary Labor Economics 9th Edition by Campbell Mcconnell, Stanley Brue, David Macpherson, Robert Powell, David Colander

Exercise 16

Discuss the relationship between aggregate productivity growth and price inflation. Draw a diagram (similar to Figure 17.8 ), putting average annual productivity growth on the horizontal axis and average annual price changes on the vertical axis. If you were to plot relevant data for, say, 60 or 70 major industries, what general relationship would you expect? Explain.