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(a) We saw in Chapter 4 that the TFP for Brazil is about 0.43(=43%). Briefly and clearly explain what this number 0.43 tells us. -
(a) We saw in Chapter 4 that the TFP for Brazil is about 0.43(=43%). Briefly and clearly explain what this number 0.43 tells us. - TFP refers to Total Factor Productivity of a nation, and it measures how effective is an economy by applying all factors of production. At the given question, the 0.43 TFP for Brazil refers to the quantity produced using 100% of inputs. (b) Relative to the USA, Argentina's y=0.30 and k=0.18. Calculate its TFP (A) using the production model we studied (round to the 2 nd decimal place). y=Ak1/30.30=A(0.18)1/3A=3.33333A=3.33 fich to poor countiet? If a country has a high value of A, if will have a higher level of outpat for an the the the 1/3 power) in the second column and "inplied TFe" in the thind. As we aw Wiven walue of K and L. What is A ? We can interpret it as an efficiency of carlier, if countries differed only in tertms of capital pet perwen, we would cepect eferrod to as total factor productivity, or TFP. capita income of about 65 peroent of the US. keve if its TrP were the same as that of the United States. Instead, its income is ooly 28 percent of the U. Level. Our is only about 0.43 times the US. level. So if we gwe China the ame amount of
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