Labour-Augmenting Technological Change Refers to Improvements in Efficiency That

question 29

Multiple Choice

Labour-augmenting technological change refers to improvements in efficiency that

• A) occur without increasing the productivity of labour or the efficiency of capital goods.
• B) increase the productivity of labour and the efficiency of capital goods.
• C) increase the efficiency of capital goods without having to increase the productivity of labour.
• D) increase the productivity of labour but that do not directly make capital goods more efficient.

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Definitions:

Real Interest Rates

Measures the borrowing cost of money after adjusting for inflation, providing a clearer view of the true cost of borrowing or the true yield on an investment.

Nominal Rate of Interest

The rate of interest before adjustments for inflation.

Inflation Rate

The speed at which the overall price level for goods and services increases, leading to a decline in buying power.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.