Productivity as a Relation of Economy Output and Input. Role of Productivity in Price Dynamics.
This paper investigates the relationship between output goods in an economy and the input factors utilized to produce them. By defining stable prices relative to a chosen base good (or basket of goods), it illustrates how inflation or deflation can be controlled. The concept of productivity plays a key role in determining changes in relative prices: when the productivity of an individual good or service grows faster or slower than the average productivity, its price decreases or increases relative to others. Likewise, in the input (factor) economy, the real price of a factor changes in line with its productivity. Through these analyses, the paper shows that both GDP (output) and GDI (input) can be linked via an appropriate choice of base prices, helping to maintain a stable price environment and providing a consistent way to measure real growth over time.
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