14. Along the balanced growth path if productivity grows by 2%, and labor grows by 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much would output grow? A) 1.1% B) 2.0% C) 3.5% D) 4.2%

14. Along the balanced growth path if productivity grows by 2%, and labor grows by 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much would output grow? A) 1.1% B) 2.0% C) 3.5% D) 4.2%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

14. Along the balanced growth path if productivity grows by 2%, and labor grows by
1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8,
respectively, how much would output grow?
A) 1.1%
B) 2.0%
C) 3.5%
D) 4.2%

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5 Define total factor productivity (TFP). Show how to use the production function to estimate the TFP for Mexico relative to the United States. (If you want to use numbers, Mexico’s capital per person (k) was 32% of the U.S.’s and its GDP per capita was 30% of U.S.’s in 2014.) Germany has 2% more capital per person that the U.S., and German GDP per person is about 90% of U.S. GDP per person. Is TFP higher in the U.S. or in Germany?
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