Assume an Endogenous Growth Model with Labor Augmenting Technology

question 38

Multiple Choice

Assume an endogenous growth model with labor augmenting technology.The production function is Y = F(K,AN) , where A = a(K/N) such that y = ak.If the savings rate is s = 0.1, the rate of population growth is n = 0.04, and the depreciation rate is d = 0.02, how much would "a" have to be to achieve a 12% growth rate of output?

• A)0)6
• B)1)2
• C)1)8
• D)2)0
• E)2)4

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