In the context of economic growth, the Solow residual measures:
A. Contribution of technological progress (total factor productivity)
B. Contribution of natural resources only
C. Contribution of capital accumulation only
D. Contribution of labour force growth only
Answer: Option A
Solution (By JKSSB Mock Tests)
The Solow residual is the portion of output growth that cannot be explained by the growth of capital and labour inputs; it is attributed to technological progress or total factor productivity.
Explanation:
Absolute purchasing power parity states that the nominal exchange rate should equal the ratio of the domestic to the foreign price level so that a basket of goods costs the same in both countries.
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