1. Discuss the following statement: "Higher labor productivity allows firms to produce more goods with the same number of workers and thus to sell the goods at the same or even lower prices. That's why increases in labor productivity can permanently reduce the rate of unemployment without causing inflation".
2. How might policy changes in (a) through (d) affect the wage gap between low-skill and high-skill workers in the United States?
a. increased spending on computers in public schools.
b. restrictions on the number of foreign temporary agricul- tural workers allowed to enter the United States.
c. an increase in the number of public colleges.
d. tax credits in Central America for U.S. firms.