Assume That an Economy Described by the Solow Model Is

question 32

Multiple Choice

Assume that an economy described by the Solow model is in a steady state with output and capital growing at 3 percent, labor growing at 1 percent, and technological progress growing at 2 percent. The capital share is 0.3. The growth-accounting equation indicates that the contributions to growth of capital, labor, and total factor productivity are:

• A)0 percent, 1 percent, and 2 percent, respectively.
• B)0.3 percent, 0.7 percent, and 2 percent, respectively.
• C)0.9 percent, 0.7 percent, and 1.4 percent, respectively.
• D)1.8 percent, 0.3 percent, and 0.9 percent, respectively.

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Definitions:

NAL

Net Advantage to Leasing, a financial calculation to determine whether leasing an asset is more cost-effective than purchasing it.

International Accounting Standards

A set of accounting guidelines that dictate how financial transactions and statements should be recorded and reported across different countries.

IAS 17

An international accounting standard that provides guidance on the accounting and financial reporting of leases.

Unqualified Audit Report

An auditor's report that is issued when an auditor determines that all of the financial records provided by a company are free of material misstatement, indicating a clean bill of health.