An example of the limits of using TFP as the sole driver of recessions is:
A) noting that there was a large positive TFP shock during the Great Recession.
B) that hyperinflations nearly destroyed many African economies.
C) finding that financial shocks have been the cause of every recession since 1960.
D) that it is impossible to, even weakly, estimate TFP shocks.
E) demonstrating that no shock is random.

Question

Quizplus · Accepted Answer

TFP (Total Factor Productivity) shocks typically refer to changes in how efficiently inputs are used in the production process. The Great Recession, which began in 2007, was characterized by a significant downturn in economic activity across the globe, not by a large positive TFP shock. This illustrates the limits of attributing recessions solely to TFP changes, as other factors like financial shocks played a crucial role in the Great Recession.

An Example of the Limits of Using TFP as the Sole