If the utilization rates of capital and labour are procyclical,then
A)output will rise in recessions and decline in expansions.
B)measured productivity will be constant.
C)the Solow residual will be procyclical.
D)prices will be countercyclical.

Question

Quizplus · Accepted Answer

The Solow residual, which measures productivity, tends to be procyclical because it captures the effects of changes in utilization rates of capital and labor, which increase in expansions and decrease in recessions.

If the Utilization Rates of Capital and Labour Are Procyclical,then