If Output Per Hour Grows by 4 Percent and Capital

question 136

Multiple Choice

If output per hour grows by 4 percent and capital per hour of work grows by 6 percent, then, based on Solow's growth accounting formula, the growth rate of technology is

• A)6 percent.
• B).67 percent.
• C)2 percent
• D)0 percent.
• E)1 percent.

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Definitions:

Present Value

Present value is a financial concept that calculates the current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Annuity

A financial product that pays out a fixed stream of payments to an individual, often used as an investment for retirement.

Earnings Rate

A measure of the profitability of a company or investment, typically expressed as a percentage.

Net Present Values

A method used in capital budgeting to analyze the profitability of an investment or project by calculating the present values of all cash inflows and outflows.