Suppose that capital per hour of labor increases by 15 percent and that real GDP per hour of labor increases by 10 percent. What is the contribution to the increase in real GDP per hour of labor from the change in capital per hour of labor?

Question

Quizplus · Accepted Answer

The contribution to the increase in real GDP per hour of labor from the change in capital per hour of labor is 5 percent. This is because the increase in capital per hour of labor is 15 percent, and the increase in real GDP per hour of labor is 10 percent. Therefore, the contribution from the change in capital per hour of labor is 15 percent - 10 percent = 5 percent.

Suppose That Capital Per Hour of Labor Increases by 15