From one year to the next, a country's output rose from 4000 to 4500, its capital stock rose from 10,000 to 12,000, and its labor force declined from 2000 to 1750. Suppose aK = 0.3 and aN= 0.7
(a) How much did capital contribute to economic growth over the year?
(b) How much did labor contribute to economic growth over the year?
(c) How much did productivity contribute to economic growth over the year?
(a) aK ?K/K = 0.3(2000 / 10,000 ) = 6%.
(b) aN ?N/N = 0.7 (-250 / 2000 ) = -8.75%.
(c) ?Y/Y = 500/4000 = 12.5%.
?A/A = ?Y/Y - aK?K/K - aN ?N/N
= 12.5% - 6% - (-8.75%)
= 15.25%.
You might also like to view...
Which of the following factors does NOT shift the supply of loanable funds curve?
i. change in disposable income ii. change in wealth iii. change in expected profit A) i only B) ii only C) iii only D) ii and iii E) i and ii
An unexpected increase in the demand for accountants will lead to
a. an increase in their earnings and an expansion in the future supply of accountants. b. a decrease in the incentive of students to prepare for a career in accounting. c. a reduction in the current earnings of accountants, followed by a reduction in the future supply of accountants. d. a reduction in the employment of accountants but not their wage rates.