An Increase in Total Factor Productivity Has Different Effects in an Open

question 54

Multiple Choice

An increase in total factor productivity has different effects in an open economy relative to a closed economy because

• A) the real interest rate does not change in the open economy.
• B) the change in the real interest rate involves a substitution effect only in the open economy.
• C) the real interest rate does not change in the closed economy.
• D) the real interest rate decreases in the open economy and increases in the closed economy.
• E) it is a positive income effect in the closed economy and a negative one in the open economy.

---

Definitions:

Agency Costs

Expenses stemming from conflicts of interest between principals (owners) and agents (managers) in a corporation.

Decision Management

The process of making business decisions through repeatable and manageable methodologies, often aided by specialized software.

Standard Costs

Predetermined costs for materials, labor, and overheads used as benchmarks to evaluate actual production or manufacturing costs.

Printer Supplies

Items and consumables such as ink, toner, paper, and maintenance kits needed for the operation of printers.