Given data on capital (K),labor (N),and output (Y),and estimates of capital's share of output (a),the Solow residual is measured as
A)Y KaN1-a
B)(Y Ka)/ N1-a
C)Y / (KaN1-a)
D)1/(Y KaN1-a)

Question

Quizplus · Accepted Answer

The Solow residual is calculated as the ratio of actual output (Y) to the predicted output from a Cobb-Douglas production function, which is Y = K^a * N^(1-a). Thus, the Solow residual is Y / (K^a * N^(1-a)).

Given Data on Capital (K),labor (N),and Output (Y),and Estimates of Capital's