Procyclical Total Factor Productivity (TFP)could Be Caused by

question 31

Multiple Choice

Procyclical total factor productivity (TFP) could be caused by

• A) when TFP rises, real GDP falls.
• B) measurement error.
• C) the labour input to production is countercyclical.
• D) lower investment when real GDP is high.
• E) lower average labour productivity when real GDP is high.

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Definitions:

Required Rate

is the minimum return that investors expect from an investment, taking into account the risk level compared to the risk-free rate of return.

Net Present Value

A valuation method used to determine the attractiveness of an investment opportunity, calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Discounted Payback

is a capital budgeting method that calculates the period of time required for the discounted cash flows from a project to recoup its initial cost.