medium · GRE Verbal

Economists once treated the sharp productivity slowdown of the 1970s as a puzzle to be explained by oil shocks or demographic shifts. A revisionist camp now contends that the slowdown was partly a measurement artifact. As advanced economies shifted from manufacturing toward services, national accounts—designed to tally physical output—struggled increasingly to capture value. The output of a hospital or a software firm resists the units that once made steel or wheat easy to count. If quality gains in services went unrecorded, then measured productivity understated true progress. Critics of this view concede that measurement lagged reality but deny that the gap is wide enough to erase the slowdown. They note that even sectors with straightforward output metrics decelerated. The disagreement matters because policy prescriptions diverge sharply: if the slowdown is largely illusory, forceful action to revive growth may address a problem that scarcely exists.

The revisionist camp would be most likely to agree with which of the following statements?

  1. The productivity slowdown of the 1970s resulted chiefly from oil shocks.
  2. Manufacturing output is inherently harder to measure than the output of services.
  3. Standard national accounts may fail to record real gains in service quality.
  4. Problems of measurement render all economic statistics essentially worthless.
  5. Sectors with clear output metrics also decelerated during the period.

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