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A. What Is the Solow Residual

question 15

Essay

a. What is the Solow residual?
b. Compare Prescott’s interpretation of the fluctuations of the Solow residual over the business cycle with more standard explanations of these fluctuations.


Definitions:

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no net change in the concentration of reactants and products.

Arsenopyrite

A metallic gray, natural mineral compound of arsenic, iron, and sulfur, often associated with the occurrence of gold.

Formula

A concise way of expressing information symbolically, as in a mathematical or chemical formula representing the composition of substances.

FeAsS

Also known as Arsenopyrite, it is a mineral consisting of iron, arsenic, and sulfur.

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