Question

From the list below, select the components or inputs associated with the production function where GDP is the output. There is more than one possible answer.

a. Human Capital
b. Capital Deepening
c. Aggregate Demand
d. Aggregate Supply
e. Labor

Answer 1

The inputs for the production function where GDP is the output include labor, human capital, physical capital, and technology. Aggregate demand is not an input but a determinant of production levels. These inputs collectively determine a nation's GDP.

Step-by-step explanation:

When analyzing the components or inputs associated with the production function where GDP is the output, it is essential to recognize that economists use the aggregate production function to represent the entire economy's production capacity. The inputs typically include workforce (labor), human capital, physical capital, and technology. Aggregate demand is not typically considered an input in the production function; instead, it is a determinant of the level of production within an economy.

For the production function where GDP is the concern, labor is indeed a crucial input. It represents the workforce component, which is the aggregate of all human physical and mental effort used in the creation of goods and services. The other inputs such as human capital (the skills and knowledge possessed by the workforce), physical capital (the machinery, buildings, and infrastructure), and technology (the body of knowledge and technique applied to the production process) play significant roles in determining the output of an economy, which is the GDP.