Using the growth accounting equation, if the growth rate of output is 5 percent, the growth rate of labor is 3 percent, the growth rate of capital is 2 percent, and α = 0.75, then the growth rate of technology can be estimated to be:

Question

Quizplus · Accepted Answer

The growth accounting equation is: Growth rate of output = α * (Growth rate of capital) + (1-α) * (Growth rate of labor) + Growth rate of technology. Plugging in the values: 5% = 0.75 * 2% + 0.25 * 3% + Growth rate of technology. Solving this gives a technology growth rate of 2.75%.

Using the Growth Accounting Equation, If the Growth Rate of Output