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

question 84

Multiple Choice

Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 4 percent, the growth rate of technology is 3 percent, and α = 0.8, then the growth rate of capital can be estimated to be:

• A) 4.75 percent.
• B) 5 percent.
• C) 5.5 percent.
• D) 6 percent.

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Definitions:

Interest Method

A financial calculation used to determine the amount of interest due or earned over a specific period of time, considering factors like principal, rate, and time.

Annuity

An investment vehicle that provides a consistent series of payments to a person, mainly serving as a source of income for those who have retired.

Compound Interest

Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Present Value

The assessed present-day value of money to be received in the future or a pattern of cash inflows, factoring in an established rate of return.