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Suppose That a Technological Advance Raises Total Factor Productivity

question 30

Essay

Suppose that a technological advance raises total factor productivity.Explain,step-by-step,how the economy adjusts to arrive at a new long-run equilibrium.


Definitions:

Current Liability

A company's debt or obligations that are due within one year and are listed on a company's balance sheet.

Treasury Stock

Shares that were once issued and fully paid for but have since been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Specific Identification

An inventory valuation method where individual costs are assigned to specific goods or inventory items, useful for tracking high-cost or unique items.

Average Costing

A method of inventory valuation where the cost of goods sold and ending inventory values are determined by averaging the cost of all similar items in the inventory.

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