Output in the economy of Erewhon has grown 3% per year over the past 30 years.

The labor force has grown at 1% per year, and the quantity of physical capital has grown at 4% per year. The average education level hasn’t changed. Estimates by economists say that each 1% increase in physical capital per worker, other things equal, raises productivity by 0.3%. (Hint: % change in (X/Y) = % change in X − %

change in Y.)

a. How fast has productivity in Erewhon grown?

b. How fast has physical capital per worker grown?

c. How much has growing physical capital per worker contributed to productivity growth? What percentage of productivity growth is that?

d. How much has technological progress contributed to productivity growth?

What percentage of productivity growth is that?