Over the past year, an economy's labor supply increased from 100 to 102, its capital stock increased from 1000 to 1030, and its output increased from 500 to 525. All measurements are in real terms. Calculate the contributions to economic growth of growth in capital, labor, and productivity if aK = 0.2 and aN = 0.8.
What will be an ideal response?
| ? | One Year Ago | Today | Percent Change |
| Y | 500 | 525 | 5% |
| K | 1000 | 1030 | 3% |
| N | 100 | 102 | 2% |
?A/A = ?Y/Y - aK ?K/K - aN ?N/N
| ? | = 5% - (0.2 × 3%) - (0.8 × 2%) |
| ? | = 5% - 0.6% - 1.6% |
| ? | = 2.8% |
Economics
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