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Scenario: Technological Progress and Productivity Growth in Techland
In Techland, from 1980 to 2010, holding technology and human capital fixed, increasing physical capital per worker from $25,000 to $100,000 would have led to a doubling of real GDP per worker, from $40,000 to $80,000. However, not only did physical capital per worker increase from $25,000 to $100,000, but technological progress shifted the productivity curve upward so that real GDP per worker actually increased from $40,000 to $320,000.
-(Scenario: Technological Progress and Productivity Growth in Techland) Look at the scenario Technological Progress and Productivity Growth in Techland. What was the growth rate of real GDP per capita in Techland?

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Quizplus · Accepted Answer

The growth rate of real GDP per capita in Techland can be calculated as (final GDP per worker / initial GDP per worker)^(1/number of years) -1. Plugging in the values, we get ((320,000/40,000)^(1/30))-1 which is approximately 7%. Therefore, the correct answer is option C, 7%.

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