In the relationship expressed in functional form Y = G(K, L), Y stands for real GDP, K stands for the amount of capital in the economy, and L stands for the amount of labour in the economy. In this case G( ):
A)is the growth rate of real GDP when the amount of capital and labour in the economy is fixed.
B)indicates that the variables inside the parentheses are endogenous variables in the model.
C)is the symbol that stands for government input into the production process.
D)is the function telling how the variables in the parentheses determine real GDP.

Question

Quizplus · Accepted Answer

G is the function that describes how the inputs, capital (K) and labor (L), are transformed into output, real GDP (Y).

In the Relationship Expressed in Functional Form Y = G(K