The one-third rule states that a 1 percent increase in capital per hour of labor leads to a 1/3 percent increase in real GDP per hour of labor. This means that an increase in the quantity of capital used in combination with labor will increase the output of goods and services.

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The One- Third Rule

Question 236

Multiple Choice

The one- third rule

A) says that if capital and labor are each increased 1 percent, then real GDP per person will increase by 1/3 percent.
B) states that a country's GDP is comprised of one- third international trade.
C) says that a 1 percent increase in capital per hour of labor leads to a 1/3 percent increase in real GDP per hour of labor.
D) relates changes in productivity growth to changes in real GDP growth.

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