The growth accounting equation suggests that the growth rate of output is equal to the growth rate of ________.
A)total factor productivity plus the contributions of both capital and labor
B)total factor productivity minus the rate of depreciation
C)capital and labor
D)the overall population

Question

Quizplus · Accepted Answer

The growth accounting equation states that the growth rate of output is equal to the growth rate of total factor productivity plus the contributions of both capital and labor. This equation is used to analyze the sources of economic growth and can help policymakers determine which factors to focus on to increase output. Option B is partially correct but doesn't include labor, which is also a crucial factor in economic growth. Option C is too general and doesn't specify the contribution of each factor. Option D is not relevant to the growth accounting equation.

The Growth Accounting Equation Suggests That the Growth Rate of Output