Compute the percentage changes in output, capital, and labor between 2006 and 20
ID: 1204371 • Letter: C
Question
Compute the percentage changes in output, capital, and labor between 2006 and 2006 and then complete the equation below. #1 A. 1.79% B. 4.25% C. 10.11% D. 5.39%#2. A. 6.73% B. 1.21% C. 2.24% D. 9.09%
#3 A. 4.82% B. 2.46% C. 4.88% D. 8.38%
#4. The percentage change in GDP due to total factor productivity is equal to _____. A. 0.49% B. -0.76% C. 1.89% D. 6.78%
#5. Suppose the government of Mugland collects $4 billion in tax revenues, borrows $2 billion, and plans to spend $10 billion. The government must, therefore, increase the money supply by ____ billion for the government budget constraint to hold.
#6. Which of the following statements regarding the relationship between fiscal and monetary policies is correct? A. If the Fed raises interest rates, this lowers the cost of government debt, decreasing government expenditures. B. If the Fed raises interest rates, the cost of government debt rises, increasing government expenditures. C. The effects of fiscal policy and monetary policy are independent of one another. D. Government spending that leads to large fiscal deficits can cause interest rates to fall.
Explanation / Answer
Percentage change is calculated as = (final value - initial value)/initial value*100.
1. Change in output = (130500 - 123825)/123825*100
Change in output = 0.0539*100 = 5.39%
Option D is correct.
2. change in capital = (180-165)/165*100
change in capital = 0.0909*100 = 9.09%
Option D is correct.
3. change in labour = (12900-12300)/12300*100.
change in labour = 0.0487*100 = 4.88%
Option C is correct.
4. Plugging in all the values into the equation, we get,
5.39% = %change in TFP + 0.3*9.09% + 0.7*4.88%
solving,
5.39% = %change in TFP + 2.727% + 3.416%
% change in TFP = 5.39% - 6.143%
%change in TFP = -0.76
Option B is correct.
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