Question

The production function is

Y = A ´ Ka ´ L1- a.

If a = 0.3, and over the past year output grew 5 percent, capital grew 2 percent, and labor grew 3 percent, what was the growth rate of total factor productivity (TFP)?

a) 0 percent

b) 2.3 percent

c) 2.5 percent

d) 2.7 percent

Question

The production function is

Y = A ´ Ka ´ L1-a.

If a = 0.4, and over the past year output grew 4 percent, total factor productivity (TFP) grew 2.6 percent, and labor grew 1 percent, what was the growth rate of capital?

a) 4 percent

b) 3 percent

c) 2 percent

d) 1 percent.