Suppose that real GDP per hour of labor grew by 6 percent last year and the capital per hour of labor grew 9 percent. Using the one- third rule, by how much did the increase in capital per hour of labor increase real GDP per hour of labor?

Question

Quizplus · Accepted Answer

According to the one-third rule, the contribution of capital to the growth of real GDP per hour of labor can be estimated by taking one-third of the growth in capital per hour of labor. Therefore, the increase in real GDP per hour of labor due to the increase in capital per hour of labor can be estimated as 9/3 = 3 percent.

Suppose That Real GDP Per Hour of Labor Grew by 6