You are an economist working for the International Monetary Fund.Your boss wants to know what is the total factor productivity of China,but all you have is data on per capita GDP,y,and the per capita capital stock,k.If you assume that capital's share of GDP is one-third,what would you use to find total factor productivity?
E)none of the above

Question

Quizplus · Accepted Answer

Total factor productivity (TFP) can be calculated using the formula TFP = Y/K^(1/3), where Y is per capita GDP and K is per capita capital stock. Given that capital's share of GDP is one-third, we can assume that Y/K^(1/3) = (1/3)Y/K, and thus TFP = 3(Y/K) = 3(k*y)/K = 3*(per capita GDP*per capita capital stock)/(per capita capital stock)^(1/3). Therefore, the correct answer is D.

You Are an Economist Working for the International Monetary Fund