The short-run level effect of this influx of immigrants on GDP per capita is
[ Select ]
positive
negative
zero
.

Question

The short-run level effect of this influx of immigrants on GDP per capita is 
[ Select ]
positive
negative
zero
 .

BlackTom AI · Accepted Answer

We are evaluating the short-run impact of an influx of immigrants on GDP per capita, choosing among: positive, negative, or zero.
Option 1: positive. Why this might be considered incorrect: in the short run, a sudden larger labor supply could temporarily depress average productivity or capital deepening effects may not yet materialize, and if the economy is near full employment the immediate impact could reduce GDP per capita. However, claiming a universal short-run positive effect ignores potential displacements, crowding of jobs, or transitional costs, making this option less convincing.
Option 2: negative. This option can be supported by standard short-run growth accounting intuition: an influx of workers raises the denominator (population) faster than the numerator (GDP) if output doesn't rise proportionally right away, reducing GDP per capita. In the short run, there may be insufficient capital stock or demand to absorb new workers at high productivity, leading to a drop in per-capita output. Additionally, if the economy operates near capacity, the immediate boost to overall GDP could be limited, so per-capita GDP could fall.
Option 3: zero. This would imply that GDP per capita remains unchanged despite more people, which would require perfectly offsetting increases in total GDP alongside population, or immediate proportional scaling of output with population. In the short run, such precise scaling is unlikely due to adjustment frictions, delays in capital deepening, and potential underutilization of new labor, making a zero effect an unlikely general outcome.
In sum, the most plausible short-run outcome given a sudden immigration influx is that GDP per capita falls or decreases somewhat, because population rises and output does not instantaneously scale up in lockstep. The negative result reflects common short-run transitional dynamics, while the positive and zero options rely on stronger assumptions about instantaneous productivity gains or perfectly proportional growth that are less typically observed in the short run.
Therefore, the reasoning supports interpreting the negative option as the appropriate short-run effect, with the other two options requiring more specific conditions to hold true in the immediate period.

FA25 ECON 302 002 Homework #4 (Economics of Ideas)

The short-run level effect of this influx of immigrants on GDP per capita is [ Select ] positive negative zero .

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