Renewable vs

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According to the text, what happens to aggregate supply when labor costs, raw material prices, and energy prices decrease?

Aggregate supply fluctuates

Aggregate supply increases (correct)

Aggregate supply remains unchanged

Aggregate supply decreases

From an investment perspective, what is the suggested action when there is a decline in aggregate supply (leftward shift of the SRAS curve)?

Reduce investment in fixed income (correct)

Increase investment in real estate

Increase investment in most equity securities

Increase investment in commodities or commodity-based companies

What happens to the AS curve when there is higher productivity growth?

The AS curve fluctuates

The AS curve remains unchanged

The AS curve shifts to the left

The AS curve shifts to the right (correct)

What are the investment implications when there is an increase in aggregate supply (rightward shift of the SRAS curve)?

Favorable for most asset classes other than commodities Signup and view all the answers

Which of the following is a key determinant of economic growth?

Technological progress Signup and view all the answers

What does the labor share measure in the growth accounting equation?

Employee compensation Signup and view all the answers

Which sector has made a significant contribution to economic growth, employment, and exports in developed countries?

Information technology Signup and view all the answers

What does the growth accounting equation in per capita terms explain?

Growth in per capita GDP Signup and view all the answers

Which of the following factors is NOT considered in the measurement of Total Factor Productivity (TFP)?

Physical capital stock Signup and view all the answers

What is the labor force defined as?

The portion of the working age population that is employed or available for work but not working Signup and view all the answers

What does human capital reflect?

The accumulated knowledge and skill that workers acquire from education, training, and life experience Signup and view all the answers

What is the correlation between investment (as a percentage of GDP) and economic growth?

High Signup and view all the answers

Which of the following is a characteristic of renewable resources?

They have few substitutes Signup and view all the answers

Which countries have relatively high per capita incomes due to their resource base?

Brazil and Australia Signup and view all the answers

What are externalities in the context of public infrastructure?

Effects of production and consumption activities on others Signup and view all the answers

What is the relationship between carbon dioxide emissions and economic growth?

Carbon dioxide emissions rise with economic growth Signup and view all the answers

Which of the following statements is true about economic growth?

Rapid growth in per capita real GDP can transform a poor nation into a wealthy one. Signup and view all the answers

What is the neoclassical or Solow growth model based on?

The accumulation of capital, labor, and raw materials used in production. Signup and view all the answers

What does potential GDP measure?

The economy's productive capacity. Signup and view all the answers

Why is there a limit to how fast an economy can grow?

The costs associated with excess growth. Signup and view all the answers

According to the text, what does the parameter A represent in the production function Y = AF(L,K)?

Total factor productivity (TFP) Signup and view all the answers

What does the assumption of constant returns to scale in the production function mean?

If all the inputs in the production process are increased by the same percentage, then output will rise by that percentage Signup and view all the answers

What does diminishing marginal productivity mean in the context of the production function?

The extra output produced from a one-unit increase in an input will decline Signup and view all the answers

According to the text, what is the only way to sustain growth in potential GDP per capita in the long run?

Growth in total factor productivity (TFP) Signup and view all the answers

Which factors can influence innovative activity and economic growth?

All of the above Signup and view all the answers

What is potential GDP?

An unobserved concept that is approximated using a number of alternative methods Signup and view all the answers

How can economists estimate potential GDP?

By measuring the productivity of the labor force Signup and view all the answers

What is labor productivity?

The quantity of goods and services that a worker can produce in one hour of work Signup and view all the answers

Why is understanding changes in potential GDP important for financial analysts?

It helps them forecast the economy's sustainable growth path Signup and view all the answers

Why is using total hours worked important when calculating labor productivity?

To adjust for the fact that not everyone works the same number of hours Signup and view all the answers