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In the Country of Aargh, in the Equation for TFP

Question 77

Essay

In the country of Aargh, in the equation for TFP,
Y = A × Ka × L1?a,
the coefficient is a = 0.2.The capital stock is growing 6 percent per year, employment is growing 1 percent per year, and output is growing 4 percent per year.In the country of Blargh, the coefficient is a = 0.25, the capital stock is growing 10 percent per year, employment is growing 2 percent per year, and output is growing 5 percent per year.In which country is TFP growing the fastest? In which country is output per worker growing the fastest? Explain your answer and show all your calculations.

Correct Answer:

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TFP growth is based on the equation
blured imageblured imageblured image%?A ...

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