Given the production function Y = AF(K,N) and assuming constant returns to scale, the contribution of capital to output growth can be estimated by
A)adding the growth rate of capital to the term A
B)multiplying the growth rate of capital by capital's share in production
C)subtracting the growth rate of labor from the rate of technological advancement
D)multiplying the capital-labor ratio by the level of output
E)multiplying total factor productivity with capital's share in production

Question

Quizplus · Accepted Answer

The contribution of capital to output growth can be estimated by multiplying the growth rate of capital by capital's share in production. This is because for the production function Y = AF(K,N), the output is a function of capital and labor inputs, with A as total factor productivity. Assuming constant returns to scale, if the capital stock increases by a certain percentage, output should increase by the same percentage. Therefore, the contribution of capital to output growth is proportional to capital's share in production.

Given the Production Function Y = AF(K,N) and Assuming Constant