How Sound are the Foundations of the Aggregate Production Function? ... This critique is that because at the aggregate level only value data can be used to estimate production function, this means that the estimated parameters of the production function are merely capturing an underlying accounting identity. ... It is concluded that the theoretical basis of the aggregate production function is problematic. ... Moreover, "the concept of the economic meaningful aggregate production function requires much stronger and much less plausible conditions than the concept of an aggregate consu...

• Word Count: 11086
• Approx Pages: 44
• Has Bibliography
• Grade Level: Undergraduate

Following on, human capital is an important factor for increasing economic growth of a country, as the education and training of a population is an important factor in the aggregate production function. ... On the graph below, point A shows that the economy's resources are not being used to the fullest extent possible, meaning that there is underemployment or unemployment of the factors of production.Economic growth would cause the production possibilities curve to move from point A to Point B.  If there are more resources, we are able to produce more and therefore the production ...

• Word Count: 1462
• Approx Pages: 6
• Grade Level: Undergraduate