Question: During recessions U S firm lay off a larger proportion of
During recessions, U.S. firm lay off a larger proportion of their workers than Japanese firm do. (It has been claimed that Japanese firms continues to produce at high levels and store the output or sell it at relatively low process during the recession.) Assuming that the production function remains unchanged over a period that is long enough to include many recessions and expansions, would you expect the average product of labor to be higher in Japan or the United States? Why?
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