Exhibit 21-1

-Suppose a country's capital stock is $14 trillion, and a fall in government spending causes a $700 billion increase in investment. Use the growth-accounting formula to determine the effect the change in government purchases has on long-run output growth. (Assume that the coefficient on capital in the growth accounting formula is one-third.)

Question

Exhibit 21-1
 
-Suppose a country's capital stock is $14 trillion, and a fall in government spending causes a $700 billion increase in investment. Use the growth-accounting formula to determine the effect the change in government purchases has on long-run output growth. (Assume that the coefficient on capital in the growth accounting formula is one-third.)

Quizplus · Accepted Answer

The Answer of Exhibit 21-1
 
-Suppose a country's capital stock is $14 trillion, and a fall in government spending causes a $700 billion increase in investment. Use the growth-accounting formula to determine the effect the change in government purchases has on long-run output growth. (Assume that the coefficient on capital in the growth accounting formula is one-third.)

Exhibit 21-1 -Suppose a Country's Capital Stock Is $14 Trillion, and a $14