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asked ago in General Economics Questions by (2.7k points)
edited ago by
Is well known that productivity is the engine of development. After discovering agriculture, the agricultural surplus, due to innovation in crops and fields, allowed the existence of soldiers and clergymen. This productivity increase is what allows us to enjoy more products and services. Because if a person is capable of producing more, he can supply more and reach more people, what improves their living situation. In a monetary system, this productivity increase is translated into an increase of purchasing power, which gives us the oportunity to buy more products and services. But, what happens when the increase in productivity is not accompained by an increase in wages or lower prices, which stop the higher profits related to this increase in productivity? Who buys this surplus of products when consumption is not increased or prices aren’t lower?      https://1drv.ms/b/s!Ap5alRvO4PEGhU0ZzNd45Tf2H-HR                                                              This is my last work. I'm sorry if my English isn't perfect.               Ryan McConnell.
commented ago by (2.7k points)
I have to correct an issue. If you lower prices continuosly and lead to a deflaction is possible to decrease wages and prices while increasing productivity. (There is no profit as same as before at least without being an exporter) This could be the case of China. (The standard of living is lower than in an expansionary economy with low inflation related to the rest of the world)

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