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Suppose that output is growing at 3 percent per year and the elasticities of output with respect to capital and labour are 0.3 and 0.7,
Suppose that output is growing at 3 percent per year and the elasticities of output with respect to capital and labour are 0.3 and 0.7, respectively.
a) If both capital and labour grow at 1 percent per year, what would the growth rate of total factor productivity have to be?
b) What if both the labour and the capital stocks are fixed?
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