Question
. Over the last ten years, the (hypothetical) country of Gaul has experience GDP growth of 1.2% per year. The elasticity of output to capital
. Over the last ten years, the (hypothetical) country of Gaul has experience GDP growth of 1.2% per year. The elasticity of output to capital is 0.45. The growth of capital has been 3%, and the growth of labor has been 1%, over the same period. Assuming constant returns to scale in production, which of the following is correct?
a.Output per capital, on average, fell over the past 10 years.
b.Gaul experienced positive productivity growth, on average, over the past 10 years.
c.Gaul had zero productivity growth, on average, over the past 10 years.
Gaul experienced negative productivity growth, on average, over the past 10 years.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started