Question 5 5.1 Suppose an economy's production function is Y = AK L'«. If the annual rate of economic growth is 4.5 per cent and labour and capital are both growing annually by 3 per cent and 4 percent respectively, what contribution to growth is made by total factor productivity? You can assume that labour receives 65 per cent of the total income generated in this economy. 5.2 Does this mean that labour contributes 65 per cent of the increased output? Explain.
Question 5 5.1 Suppose an economy's production function is Y = AK L'«. If the annual rate of economic growth is 4.5 per cent and labour and capital are both growing annually by 3 per cent and 4 percent respectively, what contribution to growth is made by total factor productivity? You can assume that labour receives 65 per cent of the total income generated in this economy. 5.2 Does this mean that labour contributes 65 per cent of the increased output? Explain.
Chapter16: Economic Growth
Section: Chapter Questions
Problem 5E
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