Suppose the aggregate production function for the economy is Y = A x L^1/2K^1/2. What are the sources of growth in potential output in this economy? If the labour force grew by 10% but the capital stock and technology remained the same, by how much would potential output grow? Write the growth accounting equation that explains growth in potential output in this economy.

Question

Quizplus · Accepted Answer

The Answer of Suppose the aggregate production function for the economy is Y = A x L^1/2K^1/2. What are the sources of growth in potential output in this economy? If the labour force grew by 10% but the capital stock and technology remained the same, by how much would potential output grow? Write the growth accounting equation that explains growth in potential output in this economy.

Suppose the Aggregate Production Function for the Economy Is Y