If future total factor productivity increases
A) labor demand increases.
B) government expenses increase.
C) consumption demand decreases.
D) investment demand increases.

Question

Quizplus · Accepted Answer

An increase in total factor productivity would lead to an increase in the efficiency in producing goods and services. This would result in lower costs and higher profits, which would incentivize firms to invest more in capital goods and expand their production. Therefore, future total factor productivity increase would lead to an increase in investment demand.

If Future Total Factor Productivity Increases