Discuss that factors that help explain the rapid productivity growth in the United States after 1995
The following factors help explain the surge in productivity:
Surging Investment: New business opportunities in the IT sector and elsewhere, coupled with a strong national economy, led to a surge in business investment spending in the 1990s.
Energy Prices: For part of this period, especially the years 1996-1998, energy prices were falling. Note that productivity continued to surge in the early years of this decade, after energy prices had started to rise.
Advances in Information Technology: Computers became faster and much, much cheaper?as did telecommunications equipment and services. The Internet and corporate intranets became commonplace. Some also point out that it probably took American businesses some time to learn how to use the computer and telecommunications technologies that were invented and adopted between, say, 1980 and the early 1990s.
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What will be an ideal response?
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a. A decrease in the price level. b. An increase in the interest rate. c. An increase in the price level. d. An increase in real income. e. None of the above.
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