Given the distribution of GDP between capital and labor in the United States, a 2 percent increase in capital stock should produce an increase in GDP of

Question

Quizplus · Accepted Answer

The correct answer is based on the Cobb-Douglas production function, which suggests that the share of output attributable to capital (often denoted as alpha) in the United States is approximately 0.3. Therefore, a 2 percent increase in capital stock, holding labor constant, would increase GDP by 0.3 * 2% = 0.6 percent.

Given the Distribution of GDP Between Capital and Labor in the United