Using the Growth Accounting Equation, If the Growth Rate of Output

question 47

Multiple Choice

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 3 percent, the growth rate of capital is 2 percent, and α = 0.75, then the growth rate of technology can be estimated to be:

• A) 4.25 percent.
• B) 4 percent.
• C) 3 percent.
• D) 2.75 percent.

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Definitions:

Monopolistic Competition

Monopolistic competition is a market structure characterized by many firms offering products that are similar but not perfect substitutes, leading to competitive pricing and product differentiation.

Downward-Sloping Demand

A situation in economics where demand for a commodity decreases as the price increases, according to the law of demand.

No Monopoly Power

A market condition where no single seller can influence prices or market conditions due to the presence of numerous competitors.

Monopolistically Competitive

A market structure characterized by many firms offering similar but not identical products, leading to competition based on product differentiation.