CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

An economics student has estimated the following growth-accounting equation from historical data based on the Solow growth model:

Growth in potential GDP = 2.2 + 0.7 x growth in labor + 0.3 x growth in capital

What is the growth rate of total factor productivity?
A. 2.2
B. 3.2
C. It cannot be determined by the above equation.
Explanation: The intercept of the Solow growth accounting equation is the growth rate of total factor productivity. It reflects an increase in output for given inputs.

User Contributed Comments 0

You need to log in first to add your comment.