Assume an Endogenous Growth Model with Labor Augmenting Technology and a Production

question 27

Multiple Choice

Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN) , where A = 1.2(K/N) such that y = (1.2) k.If the savings rate is s = 0.15 and the rate of depreciation is d = 0.05, how high does population growth (n) have to be to achieve a growth rate of 10 percent?

• A)15%
• B)12%
• C)10%
• D)5%
• E)3%

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Definitions:

Overapplied Overhead

Refers to a situation where the applied (or allocated) manufacturing overhead costs are greater than the actual manufacturing overhead costs incurred.

Underapplied Overhead

Underapplied overhead occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred.

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as an input to a production process for manufacturing finished goods.

Production

Production is the process of creating goods and services by combining labor, materials, and technology to meet consumer demand.