Relatively small annual changes in factor productivity are
A)thought to be an important cause of long- run economic growth.
B)always cancelled out by changes in the growth in factor supplies.
C)the only important source of changes in potential GDP.
D)easy to calculate across many industries.
E)not important to long- run growth but are the dominant source of short- run changes in GDP.

Question

Quizplus · Accepted Answer

Relatively small annual changes in factor productivity are thought to be an important cause of long-run economic growth. This is because productivity reflects how efficiently inputs (such as labor and capital) are used in the production process. Over time, small improvements in productivity can lead to significant increases in output and GDP. Changes in the growth of factor supplies, on the other hand, are more likely to affect short-run fluctuations in output rather than long-run growth.

Relatively Small Annual Changes in Factor Productivity Are