Question
Economics Question on Business and Economy
The rate of growth of the output of an economy during a period is 5% If the shares of capital and labour are 0.6 and 0.4 respectively and capital and labour grow at 10% and 5% respectively, what is the solow residual for the output function given as y = A*kαL1-α
A
3%
B
2%
C
-3%
D
4%
Answer
-3%
Explanation
Solution
The correct option is(C): -3%