A Country Has an Aggregate Production Function of the Form

question 113

Multiple Choice

A country has an aggregate production function of the form Y = A × K¹/³ × H²/³,where Y denotes total output,A denotes the level of technology,K denotes the physical capital stock,and H denotes the efficiency units of production.Which of the following is likely to happen if the physical capital stock and the efficiency units of labor available to the country increase by 10 percent over a span of 5 years,while the state of technology used in the country remains the same?

• A) Output will increase by 5 percent.
• B) Output will increase by 10 percent.
• C) Output will increase by 1 percent.
• D) Output will double.

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Definitions:

Maximum Amount

The highest possible quantity or value that can be achieved or allowed, often within a specific context or regulation.

Deficit Balance

A financial situation where liabilities exceed assets or expenses exceed income, leading to a negative balance.

Capital Account

The capital account in financial accounting represents where adjustments in assets and liabilities are recorded, correlating to transactions involving investments or loans.

Liquidating Partnership

A process where a partnership ends its operations, sells off its assets, and pays its liabilities, distributing the remaining assets to the partners based on their share in the partnership.