If Capital Per Hour of Labor Grows by 3 Percent

question 162

Multiple Choice

If capital per hour of labor grows by 3 percent a year and labor productivity grows by 1.5 percent a year, the one third rule says that the growth in labor productivity can be divided so that capital growth accounted for percentage points and technological change accounted for percentage points.

• A) 1.0; 0.5
• B) 1.5; 0.0
• C) 2.0; - 0.5
• D) 0.5; 1.0

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Definitions:

Prepaid Expenses

Costs paid in advance for goods or services that will be used or consumed over time, recorded as assets on the balance sheet.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded at the end of a reporting period.

Unearned Revenue

Money received by an individual or company for a service or product that has yet to be provided or delivered.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.