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 + 0.42 x growth in labor + 0.38 x growth in capital

What's wrong with the equation?
Correct Answer: 042 + 0.38 ≠ 1

The labor share and the capital share should add up to 1.

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