Chapter 6: Long Run Economic Growth

Question 1

State an equation that represents output as a function of productivity, capital and labor.

Answer 1

Y=AF(K,N), if A, K, and N are constant, then output is also constant.

Question 2

Recall the growth accounting equation

Answer 2

Change in Y = Change in A + ak Change in K + aN Change in N
ak= elasticity of output with respect to capital
an= elasticity of output with respect to labor