One important reason why the Solow residual may be strongly procyclical even if the actual technology used in production doesn't change is that
A) employment is procyclical.
B) resource utilization is procyclical.
C) demand shocks are the dominant force determining the business cycle.
D) the coefficients (a and 1 - a) on capital and labor in the production function are procyclical.
B
You might also like to view...
A reduction in tax expenditures _____
a. will cause tax revenues to rise b. will cause government spending on social policy to rise c. will cause inflation to rise d. will reduce the tax base
Tariffs and quotas are effective in protecting industry
A. but at very high cost per job saved. B. and at very low cost per job saved. C. but have not saved any jobs in the industries. D. and do not distort the economy in the process.
Scarcity applies to: a. only the poor
b. the value of our time. c. both the rich and poor. d. both (b) and (c)
This graph represents the cost and revenue curves of a firm in a perfectly competitive market.
According to the graph shown, if a firm is producing at Q1:
A. the firm should not increase production because it will earn loss. B. average total costs exceed the market price. C. marginal revenue is greater than average total cost. D. profits are being maximized.