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Using the same production function as in question 1 assume that total GDP (Y) is growing 4 percent per year, the labor force (L) is growing 1.5 percent per year, and the capital stock (K) is growing 3 percent per year. How fast (by what percent) is total factor productivity (A) growing per year?  How fast is output per worker (Y/L) growing, and what is the contribution of the growth of total factor productivity growth (dA/A) to that growth?  What is the contribution of a faster rate of capital growth compared to labor force growth α[dK/K - dL/L] to increases in Y/L?

Macroeconomics, Economics

  • Category:- Macroeconomics
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