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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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