- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics
- Reading 11. Economic Growth and the Investment Decision
- Subject 5. Theories of Growth
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) |