Which of the following could be a NEGATIVE TFP shock?
A) a hurricane
B) lower taxes
C) a better court system
D) lower tariff rates
E) a low debt-to-GDP ratio

Question

Quizplus · Accepted Answer

A hurricane would result in destruction of infrastructure and property, leading to a reduction in productivity and output. This would lead to a negative TFP shock. The other options would generally be expected to have a positive effect on TFP.

Which of the Following Could Be a NEGATIVE TFP Shock