Changes in Total Factor Productivity Are Plausible Causes of Business

question 17

Multiple Choice

Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict

• A) real wages and total hours must be procyclical.
• B) real wages and consumption must be procyclical.
• C) total hours worked and consumption must be procyclical.
• D) consumption and government spending must be procyclical.
• E) consumption and total factor productivity must be procyclical.

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Definitions:

Financial Crisis

A situation where financial assets suddenly lose a significant part of their nominal value, often leading to bankruptcies and economic downturns.

Regulatory Changes

Modifications or updates in laws and regulations that affect how businesses operate and compete.

Property Rights

The rights to use, control, and obtain the benefits from a good or resource.

External Costs

Costs of a transaction or activity that affect parties who did not choose to incur that cost, often not reflected in the market price.