Researchers Seeking to Estimate Total Factor Productivity Often Use Investment

Multiple Choice

Researchers seeking to estimate total factor productivity often use investment to proxy the growth of the capital stock, but investment is an inaccurate measure of true g_K because:

A) investment data ignores depreciation.
B) investment data ignores the intensity with which capital is used
C) investment data does not always measure the quality of new equipment versus old equipment.
D) All of the above.
E) None of the above.