Suppose capital per hour of labor grows at 3.0 percent per year and the growth rate of real GDP per hour of labor is 2.0 percent per year. Thus technological change leads to _ percent per year change in real GDP per hour of labor.

Question

Quizplus · Accepted Answer

Technological change leads to the difference between the growth rate of real GDP per hour of labor and the growth rate of capital per hour of labor. Therefore, the answer is 2.0% - 3.0% = -1.0%, which is a decrease of 1.0% per year.

Suppose Capital Per Hour of Labor Grows at 3