Which of the following is a characteristic of the 'Solow Residual'?
A. It measures only the contribution of capital
B. It is always equal to zero
C. It measures the contribution of total factor productivity growth to output growth
D. It measures only the contribution of labour
Answer: Option C
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:
Trade deficit is a component of the balance of payments (external sector). Revenue, fiscal and primary deficits are concepts related to the government budget.
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