Question

economist who believe that the recent increase in the average productivity growth rate may be permanent claim that the above-normal economic growth in the US between 1995 and 2009 was caused by;

A. increase in the rate of personal saving

B.increased entreprenenrial activity, application of information technology, and global competition

C.rising federal budget surpluses that reduced real interest rates

D. expansionary monetary policy

Answer 1

Then answer is B) increased entrepreneurial activity, application of information technology, and global competition.

(This happened because the internet revolution was gaining tremendous pace in the US and hence entrepreneurial activity was increasing exponentially. Also, due to globalisation the benefits of these economic activities grew multiple folds. In such scenario incompetent firms were pushed out and the efficient and productive firms prevailed, thus increasing average productivity growth.)