total factor productivity that raises the expected future marginal product of capital, then in the long-run, this would cause:
a. A decrease in the real interest rate.
b. An increase in the real interest rate.
c. No change in the real interest rate.
d. An indeterminate change in the real interest rate.
Answer: Increase in total factor productivity has two effects, both long-run and short-run effects. First, increase in total factor productivity will shift the LRAS curve to the right. Second,…

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