question archive Suppose technology remains constant while labour force grew at a rate of 3
Suppose technology remains constant while labour force grew at a rate of 3
Subject:EconomicsPrice:2.86 Bought3
Suppose technology remains constant while labour force grew at a rate of 3.4 percent a year, capital stock grew at 2.1 percent per year, and the share of labour income in national income was 60 percent, how fast would potential GDP grow? Note: Keep as much precision as possible during your calculations. Your ?nal answer should be in percentage form and accurate to at least two decimal places,
Rate of potential GDP growth = 0%
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Answer:
Rate of Potential GDP Growth= 2.88%
Calculation:
=(Labor share * labor growth) + (1-labor share * Capital stock grew)
= (0.60 * 3.4) + ( 1-0.6 * 2.1)
=2.88%
