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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