Suppose an Economy Experiences an Increase in Productivity

question 58

Multiple Choice

Suppose an economy experiences an increase in productivity.The AD curve will most likely shift to the left when this increase in productivity is the result of which of the following?

• A)a major technological breakthrough
• B)a reorganization of production designed to reduce costs with existing technology
• C)an increase in human capital
• D)government subsidies for higher education
• E)none of the above

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Definitions:

Useful Life

The estimated period over which an asset is expected to be utilizable or productive before it is fully depreciated.

Straight-Line

A method of calculating depreciation or amortization by evenly distributing the cost over an asset's useful life.

Double-Declining-Balance

A method of accelerated depreciation where the asset's book value is decreased at double the rate of straight-line depreciation.

Units-Of-Activity

A depreciation method that allocates expense based on the actual usage or activity level of the asset.