GDP rises can rise in an expansion due to:
A)an increase in technology, A, directly increasing GDP.
B)an increase in technology, A, causing an increase in labour, L and GDP.
C)an increase in technology, A, causing an increase in the capital utilization rate, the quantity of capital services and GDP.
D)all of the above.

Question

Quizplus · Accepted Answer

All three factors mentioned in options A, B, and C - technology, labor, and capital utilization - can lead to an increase in GDP during an expansion. An increase in technology directly increases GDP (option A) as it allows for more efficient production processes and innovation. An increase in technology can also lead to an increase in labor and GDP (option B) as more technological developments often require an increase in skilled labor, which can lead to higher productivity and output. Finally, an increase in technology can cause an increase in the capital utilization rate, the quantity of capital services and GDP (option C) as more advanced technology can mean that capital equipment is utilized more efficiently, leading to higher output. Therefore, all three options are viable factors that can lead to GDP growth during an expansion.

GDP Rises Can Rise in an Expansion Due To