Question

Suppose a country’s population is aging and the size of the workforce is declining. in the long run, output will ________ and the price level will ________.

Answer 1

In the long run, the output will reduce and the price level will increase because there is a low size of the workforce.

How are output and price levels affected?

We know that production or output is dependent on the workforce. If a country has large workforce, then the production of the country is higher which make the economy better which results in the lower price of products while on the other hand, if a country has low workforce, then the output of the country is also lower that make the economy worse which results in the higher price of products and inflation.

So we can conclude that in the long run, the output will reduce and the price level will increase because there is a low size of the workforce.

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