Which of the following is a characteristic of the 'Solow Residual'?
A. It measures the contribution of total factor productivity growth to output growth
B. It measures only the contribution of labour
C. It is always equal to zero
D. It measures only the contribution of capital
Answer: Option A
Solution (By JKSSB Mock Tests)
The Solow residual is the part of output growth that remains after accounting for the contributions of capital and labour inputs; it is commonly interpreted as a measure of total factor productivity growth.
Explanation:
Import substitution industrialisation seeks to reduce dependence on imports by protecting and promoting domestic industries through tariffs, quotas and other measures.
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