An increase in total factor productivity involves

Question

Quizplus · Accepted Answer

Total factor productivity refers to the efficiency with which inputs (such as labor and capital) are transformed into output. Therefore, an increase in total factor productivity implies that the economy is able to produce more output with the same level of input, or the same level of output with fewer inputs. This can be achieved by improving the technology used in production, such as by developing new machinery, software, or production processes. The other choices are not directly related to total factor productivity.

An Increase in Total Factor Productivity Involves