When I hear the word “productive”, I think that there are large results, large output (without considering the value of the inputs). In the CFA, does the word productive mean that output is high, or that output is obtained through efficient measures?
For example, you have two car factories:
A) Factory A produces 10 units with a total variable cost of $50,000
B) Factory B produces 5 units with a total variable cost of $24,000
so is A more productive because it added more cars to the company’s inventory or is B more productive because they got more bang for the buck?
I don’t recall any specific definition of productivity in the CFA curriculum. If you can quote a passage, I’d be happy to help.
QUESTION : Growth in total factor productivity is best described as driven by growth in???
EXPLANATION : Total factor productivity represents the productivity that cannot be directly accounted for by increases in either capital or labor, and is generally considered to be driven by changes in technology
Ah.
In that context it simply means the level of output. An increase in productivity (an increase in output) can come from an increase in capital (more machinery to make more stuff), an increase in labor (more workers to make more stuff), or an increase in (generally) technology (the same amount of machinery and labor making more stuff).
“Total factor productivity” is a term used primarily in connection with the Cobb-Douglas production function that appears in Neoclassical Growth Theory. It shows up at Level II and Level III, but not much at Level I.
You can take a look at a couple of articles I wrote on this topic: http://financialexamhelp123.com/neoclassical-growth-theory/, and http://financialexamhelp123.com/cobb-douglas-production-function/.