The one- third rule predicts that if capital per hour of labor increases by 6 percent and real GDP per hour of labor increases by 6 percent, then the increase in capital per hour of labor increases real GDP per hour of labor by and technological change increases real GDP per hour of labor by .

Question

Quizplus · Accepted Answer

According to the one-third rule, increases in capital per hour of labor contribute one-third to the increase in real GDP per hour of labor, while increases in technological change contribute two-thirds. Therefore, if capital per hour of labor and real GDP per hour of labor both increase by 6 percent, we can calculate that 2 percent of the increase in real GDP per hour of labor is due to capital per hour of labor (one-third of 6 percent) and 4 percent is due to technological change (two-thirds of 6 percent).

The One- Third Rule Predicts That If Capital Per Hour