Final answer:
The shares of GDP in a market economy are allocated based on economic growth, which is influenced by factors such as the growth of the labor force, the rate of inflation, and the real rate of interest, with a focus on the quality of human capital.
Step-by-step explanation:
Determinants of GDP Allocation in a Market Economy
The allocation of GDP shares in a market economy is determined by a variety of factors, the most notable of which is economic growth. This growth is measured by the percentage change in real (inflation-adjusted) gross domestic product (GDP). When the rate of economic growth exceeds 3%, it is generally considered to be good and can lead to a higher standard of living.
Factors such as the growth of the labor force, rate of inflation, and the real rate of interest are all influential. Specifically, the size and education level of the labor force (or human capital), can lead to innovation and the development of physical capital, which in turn can boost GDP. Contrarily, high rates of inflation can distort GDP calculations and negatively impact the economy.
It's important also to consider population growth and its impact on economic expansion. A growing population can influence the economy's growth trajectory and per capita income.
Hence, while a large labor force can potentially increase a country's GDP, the quality of that labor force in terms of education and skill level is vital for sustainable economic development and allocation of GDP shares.