Use the following to answer questions :
Scenario: Productivity
The economy has grown by 4% per year over the past 30 years. During the same period the labor force has grown by 1% per year and the quantity of physical capital has grown by 5% per year. Each 1% increase in physical capital per worker is estimated to increase productivity by 0.4%. Assume that human capital has not changed during the past 30 years.
-(Scenario: Productivity) Look at the scenario Productivity. What is the growth rate of productivity?

Question

Quizplus · Accepted Answer

The growth rate of productivity can be calculated by subtracting the growth rate of the labor force from the growth rate of the economy. Thus, 4% (economic growth) - 1% (labor force growth) = 3% productivity growth.

Use the Following to Answer Questions