Evidence from the United States and Japan on "multifactor productivity" shows it to be highly ________,which is ________ with the RBC theory of technological shocks and their consequences for the business cycle.
A)procyclical,consistent
B)procyclical,inconsistent
C)countercyclical,consistent
D)countercyclical,inconsistent

Question

Quizplus · Accepted Answer

The question suggests that a theory called "RBC" (Real Business Cycle theory) is relevant. According to RBC theory, technological shock from innovation and advances in productivity should be procyclical - meaning that they should go up (or down) with the business cycle. Choice A fits the expected pattern of high multifactor productivity being procyclical, consistent with RBC theory. Therefore, the best choice is A.

Evidence from the United States and Japan on "Multifactor Productivity