Which of the Following Is a Reason Why the Coefficient

question 20

Multiple Choice

Which of the following is a reason why the coefficient corresponding to the growth rate of capital per hour of work is one-third in Solow's growth accounting formula?

• A)Capital income plus depreciation is approximately one-third of aggregate income.
• B)Capital income plus depreciation is approximately three times the amount of aggregate income.
• C)The amount of capital in use is approximately one-third of GDP.
• D)The amount of capital in use is approximately three times the level of GDP.
• E)Capital is one of the three factors of production.

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Definitions:

Own Wealth

The total value of all financial and non-financial assets owned by an individual or entity, minus any liabilities.

Pure Monopolist

A sole provider of a unique product or service with no close substitutes, giving them significant control over pricing.

Economies of Scale

A condition where the average costs of production fall as the output level increases, leading to a more efficient production process.

Horizontal Demand

Refers to a market situation in which the demand for a product or service is not sensitive to changes in its price, often illustrated as a horizontal line on a demand curve graph.