A “miraculous" Asian economy has an aggregate wage bill of 300 billion dollars and an aggregate GDP of 500 billion. Theannual growth rate of aggregate GDP for this economy over the last 10 years was 7 percent (that is AY/Y=0.07) and thegrowth rate of labor was 6 percent (AL/L=0.06). Imagine that the production function is given by the standard Cobb-Douglas1-aAK“L-.Y =Is the growth rate of technology positive or negative? Does your result in (b) make sense?d. The actual truth is that the growth rate of capital was one half of what it announced. That is, instead of 12% the growthrate of capital was only 6%. What was the true rate of productivity growth?What did the government accomplish by inflating the capital numbers?С.е.

The Cobb-Douglas production function is a form of production function that represents the…

A “miraculous" Asian economy has an aggregate wage bill of 300 billion dollars and an aggregate GDP of 500 billion. The annual growth rate of aggregate GDP for this economy over the last 10 years was 7 percent (that is AY/Y=0.07) and the growth rate of labor was 6 percent (AL/L=0.06). Imagine that the production function is given by the standard Cobb-Douglas Y = AK“L'-". Is the growth rate of technology positive or negative? Does your result in (b) make sense? d. The actual truth is that the growth rate of capital was one half of what it announced. That is, instead of 12% the growth rate of capital was only 6%. What was the true rate of productivity growth? What did the government accomplish by inflating the capital numbers? C. e.

A “miraculous" Asian economy has an aggregate wage bill of 300 billion dollars and an aggregate GDP of 500 billion. The annual growth rate of aggregate GDP for this economy over the last 10 years was 7 percent (that is AY/Y=0.07) and the growth rate of labor was 6 percent (AL/L=0.06). Imagine that the production function is given by the standard Cobb-Douglas Y = AK“L'-". Is the growth rate of technology positive or negative? Does your result in (b) make sense? d. The actual truth is that the growth rate of capital was one half of what it announced. That is, instead of 12% the growth rate of capital was only 6%. What was the true rate of productivity growth? What did the government accomplish by inflating the capital numbers? C. e.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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Similar questions

With reference to a Cobb-Douglas production function, if a country has a declining labor share that is expected to continue in the future, does that imply that the country will experience faster economic growth (growth in GDP per capita) in the future?
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