One Important Reason Why the Solow Residual May Be Strongly

question 24

Multiple Choice

One important reason why the Solow residual may be strongly procyclical even if the actual technology used in production doesn't change is that

• A)employment is procyclical.
• B)resource utilization is procyclical.
• C)demand shocks are the dominant force determining the business cycle.
• D)the coefficients (a and 1 - a)on capital and labor in the production function are procyclical.

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Definitions:

GDP

The measure of all goods and services produced to their final stages within the confines of a country, valued in market or monetary terms over an identified period, defines the Gross Domestic Product.

Joseph Stiglitz

An American economist and a professor at Columbia University, known for his critical view on the management of globalization and neoliberal policies.

IMF

The International Monetary Fund, an organization aimed at fostering global monetary cooperation and financial stability, facilitating international trade, and reducing poverty.

Economic Growth

Growth in an economy's goods and services production over a specific period, often assessed through the Gross Domestic Product.