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Total factor productivity is the ratio of total value added and the total cost of inputs.

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How do you calculate productivity growth?

Productivity growth is an important metric in assessing economic performance and efficiency, calculated as the percentage change in productivity over a specified time frame. But how to calculate productivity? The formula for calculating productivity growth is expressed as: Productivity Growth = (New Productivity - Old Productivity) / Old Productivity × 100 In essence, productivity represents the relationship between the output generated and the inputs utilized, serving as a crucial indicator of efficiency. A common way to quantify productivity is through the ratio of output, such as gross domestic product (GDP), to input measures like labor hours. Understanding this ratio is vital for analyzing economic trends and making informed decisions in both business and policy contexts.


What is capital output ratio?

The capital output ratio measures the amount of capital required to produce one unit of output. It helps in determining the efficiency and productivity of capital investment in a business or economy. A lower ratio indicates higher productivity and efficiency, while a higher ratio suggests lower productivity and efficiency.