Scenario: Technological Progress and Productivity Growth in Techland In Techland, from 1980 to 2010, holding technology and human capital fixed, increasing physical capital per worker from $25,000 to $100,000 would have led to a doubling of real GDP per worker, from $40,000 to $80,000. However, not only did physical capital per worker increase from $25,000 to $100,000, but technological progress shifted the productivity curve upward so that real GDP per worker actually increased from $40,000 to $320,000. Look at the scenario Technological Progress and Productivity Growth in Techland. What share of the growth rate of real GDP per capita was attributable to higher total factor productivity?

Question

Gabriela

Business

15 October, 05:53

Scenario: Technological Progress and Productivity Growth in Techland In Techland, from 1980 to 2010, holding technology and human capital fixed, increasing physical capital per worker from $25,000 to $100,000 would have led to a doubling of real GDP per worker, from $40,000 to $80,000. However, not only did physical capital per worker increase from $25,000 to $100,000, but technological progress shifted the productivity curve upward so that real GDP per worker actually increased from $40,000 to $320,000. Look at the scenario Technological Progress and Productivity Growth in Techland. What share of the growth rate of real GDP per capita was attributable to higher total factor productivity?

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Answers (1)

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Perla Osborn · Answer 1

The growth of the real GDP per capita was 7.18%

Explanation:

It is important to establish that:

Future Value = Present Value * ((1 + r) ^t), given that r is the interest rate and t is the time period

Real GDP per worker increased from $40,000 to $320,000 in 30 years

Therefore, we have;

320000 = 40000 * (1+r) ^30

(1 + r) ^30 = 8

1 + r = 8^1/30

1 + r = 1.0718

r = 0.0718 = 7.18%