Suppose That an Economy Grows by 4 Percent, Total Factor

question 29

Multiple Choice

Suppose that an economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force increases by 6 percent. If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of capital must have _____.

• A) fallen by 5%
• B) fallen by 3.33%
• C) fallen by 2.33%
• D) risen by 3%
• E) risen by 1.8%

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Definitions:

Hedge Funds

Investment funds that employ various strategies to earn returns for their investors, often engaging in more complex and higher-risk trades.

Fed's Scope

Refers to the range of activities and responsibilities undertaken by the Federal Reserve, including monetary policy, bank regulation, and financial system stability.

Aggregate Supply

The total supply of goods and services available to a particular market from producers.

Passive Approach

The Passive Approach refers to an investment or management strategy where decisions are minimal and made with the intent of achieving average market returns.