# PS4 - Econ 3140 Fall 2009 Problem Set 4 Due Monday October...

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Econ 3140 Fall 2009 Problem Set 4 Due Monday October 19 (on lecture time) Reading assignment: Chapter 6 1. If capital and labor each grow 5% in a year, the elasticities of output with respect to capital and labor sum to one, and productivity grows 2% in the year, by how much does output grow during the year? 2. From one year to the next, a country°s output rose from 4000 to 4500 , its capital stock rose from 10 ; 000 to 12 ; 000 , and its labor force declined from 2 ; 000 to 1 ; 750 . Suppose a K = 0 : 3 and a N = 0 : 7 . (a) How much did capital contribute to economic growth over the year? (b) How much did labor contribute to economic growth over the year? (c) How much did productivity contribute to economic growth over the year? 3. Question One from Abel et.al., Chapter 6, analytical problems 4. A country has a production function of the form Y t = AK 1 = 2 t N 1 = 2 t , where Y t is output produced in year t , A is the total factor productivity, K t is the available capital stock at the beginning of year t , and N t is the number of workers available at year t . The

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