An Increase in Total Factor Productivity

question 13

Multiple Choice

An increase in total factor productivity

• A) increases consumption, increases output, and increases the real wage.
• B) reduces consumption, increases output, and increases the real wage.
• C) reduces consumption, increases output and reduces the real wage.
• D) reduces consumption, reduces output, and reduces the real wage.
• E) increases consumption, reduces output, and increases the real wage.

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Definitions:

Overhaul Costs

Expenses associated with performing major maintenance or repairs to extend the life of an asset.

Salvage Value

The anticipated remaining worth of an asset when it reaches the end of its operational lifespan.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.