In Lotusland, real GDP per hour of labor grows at 6 percent a year and capital per hour of labor increases by 6 percent a year. The one- third rule tells us that capital per hour of labor increased real GDP per hour of labor by .

Question

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The one-third rule suggests that if capital per hour of labor increases by 6 percent, it contributes one-third of that increase to the growth in real GDP per hour of labor, which is 2 percent.

In Lotusland, Real GDP Per Hour of Labor Grows at 6