A rise in the multifactor productivity index means that at each (K/N)we have (Y/N)________,which shifts the (S/N)curve ________,resulting in a movement of the steady-state intersection to the ________.
A)rising,downward,left
B)rising,upward,right
C)rising,downward,right
D)falling,upward,left
E)falling,downward,left

Question

Quizplus · Accepted Answer

A rise in multifactor productivity index indicates an increase in output per unit of combined inputs (K, L and other factors of production) or Y/N at each level of capital-labor ratio (K/N). This causes a shift of the production function upwards resulting in an upward shift of the S/N (savings per worker) curve. As a result, the steady-state intersection point between the S/N curve and the (delta + n) K/N curve moves to the right, indicating an increase in the steady-state level of capital per worker (K/N) and output per worker (Y/N). Therefore, the correct answer is option B) rising, upward, right.

A Rise in the Multifactor Productivity Index Means That at Each