An Example of the Limits of Using TFP as the Sole

question 98

Multiple Choice

An example of the limits of using TFP as the sole driver of recessions is:

• A) noting that there was a large positive TFP shock during the Great Recession.
• B) that hyperinflations nearly destroyed many African economies.
• C) finding that financial shocks have been the cause of every recession since 1960.
• D) that it is impossible to, even weakly, estimate TFP shocks.
• E) demonstrating that no shock is random.

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Definitions:

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Mountain Dew

A popular citrus-flavored carbonated soft drink produced by PepsiCo.

Price

The money measure forecasted, demanded, or given in fulfillment of something.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting its perceived value.