The aggregate wage bill in an economy is equal to 40 and output (produced by a Cobb-Douglas production function) is equal to 100. The output growth rate is 10 percent and the growth rates of capital and labour are 10 percent and 5 percent respectively. What is the overall productivity (TFP) growth rate for this economy?
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The aggregate wage bill in an economy is equal to 40 and output (produced by a Cobb-Douglas production function) is equal to 100. The output growth rate is 10 percent and the growth rates of capital and labour are 10 percent and 5 percent respectively. What is the overall productivity (TFP) growth rate for this economy? (A) 0.03 (B) 0.02 (C) 0.04 (D) 0.01
Endogenous growth and technical progress has come up 25 times in 6 exams since 2016.
This question is on Technical progress and growth accounting, part of Endogenous growth and technical progress in Economics of Growth and Development.
Splitting growth into inputs and technology, and the types of technical change.
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Question from the DSE 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.