CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Capital cost in total factor cost is 40% for country A. Its TFP growth rate and labor force growth rate are 2.5% and 1.2%, respectively. Based on the neoclassical model, the country's steady state growth rate is:
A. 5.37%
B. 6.25%
C. 7.45%
Explanation: 2.5%/(1-40%) + 1.2% = 5.37%.

User Contributed Comments 2

User Comment
darbyland theta/(1-alpha) + n = steady state growth rate of output (neoclassical model)
darbyland " per capita = theta/(1-alpha)
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