Chapter 38, Problem 6MCQ

To determine

To find:

Relationship between real GDP in aggregate production

Answer to Problem 6MCQ

Option A is correct.

Explanation of Solution

Option A

Physical capital.

The aggregate production function shows the relationship between real GDP and physical capital. This relationship shows how the real GDP changes with the change in physical capital.

Option B is incorrect

Technology affect the aggregate production function but does not show the relationship on production function.

Option c is incorrect.

Human capital affect the aggregate production function but does not show the relationship on production function and real GDP.

Option D is incorrect.

The price level has no effect on production function.

Option E is incorrect.

Unemployment has no effect on production function.

Economics Concept Introduction

Economic growth is the increase in level of aggregate production of an economy which is manifested in national income. It shows the growth of production of goods and services over a year.