An increase in total factor productivity causes
A)real interest rates to rise.
B)the production function to shift up.
C)the output supply curve to shift left.
D)real wages to rise.
E)labour supply to fall.

Question

Quizplus · Accepted Answer

An increase in total factor productivity causes the production function to shift up, meaning that more output can be produced with the same amount of inputs. This leads to an increase in economic growth and potentially higher real wages. However, it does not affect real interest rates, the output supply curve, or labour supply.

An Increase in Total Factor Productivity Causes