The growth accounting equation suggests that the growth rate of output is equal to the growth...

The growth accounting equation suggests that the growth rate of output is equal to the growth rate of ________.

A. total factor productivity plus the contributions of both capital and labor
B. total factor productivity minus the rate of depreciation
C. capital and labor
D. the overall population
E. none of the aboveIf productivity growth equals 3.0 percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0 percent, then output growth must equal ________.
A. 2.2 percent
B. 4.2 percent
C. 6.2 percent
D. 7.2 percent
E. 9.1 percent

Solutions

Expert Solution

Correct option: A] total factor productivity plus the contributions of both capital and labor

The growth accounting equation suggests that the growth rate of output is equal to the growth rate of total factor productivity plus the contributions of both capital and labor.

Output growth = productivity growth + contribution from capital + contribution from labor growth

= 3.0 + 1.2 + 2.0 = 6.2 %

Correct option: C] 6.2 percent

Rahul Sunny answered 1 year ago

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