Question 1 An economy is represented by the Cobb-Douglas production function, Y = AK°L1-0 A. Derive the economy's output growth accounting equation. B. If the share of capital is 0.35, capital grows by 2%, labour grows by 2%, and the growth rate of total factor productivity is 1%, by how much does total output grow? C. Derive the economy's per capita output growth accounting equation. D. Drawing on the information provided in part B and your calculations in part B, what is the rate of growth of per capita output?

Question 1 An economy is represented by the Cobb-Douglas production function, Y = AK°L1-0 A. Derive the economy's output growth accounting equation. B. If the share of capital is 0.35, capital grows by 2%, labour grows by 2%, and the growth rate of total factor productivity is 1%, by how much does total output grow? C. Derive the economy's per capita output growth accounting equation. D. Drawing on the information provided in part B and your calculations in part B, what is the rate of growth of per capita output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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