Which of the following is NOT true about the Solow residual?
A)The Solow residual is part of the output that cannot be directly explained by capital and labour inputs.
B)The Solow residual may include factors such as government purchases and monetary policy.
C)The Solow residual represents technology shocks.
D)The Solow residual can be measured directly similar to labour and capital inputs.

Question

Quizplus · Accepted Answer

The Solow residual cannot be measured directly like labor and capital inputs. It is an unobserved variable that is calculated by subtracting the explained portion of output growth (accounted for by capital and labor inputs) from the actual growth in output.

Which of the Following Is NOT True About the Solow