$\text { Consider the following production function }$ Y = A×K^a×L^1?a. If a = 0.4, and over the past year total factor productivity (TFP) grew 2.6 percent, capital grew 2 percent, and labor grew 1 percent, what was the growth rate of output over the year?

Question

Quizplus · Accepted Answer

The growth rate of output is calculated using the formula: Growth rate of Y = Growth rate of A + a*(Growth rate of K) + (1-a)*(Growth rate of L). Substituting the given values: 2.6% + 0.4*2% + 0.6*1% = 4%.

Consider the following production function \text { Consider the following production function } Consider the following production function Y = A×Ka×L1?a

$\text { Consider the following production function }$ Y = A×K^a×L^1?a