Suppose That the Economy Grows by 4 Percent, Total Factor

Suppose that the economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force increases by 6 percent.If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of capital must have _____.

A) fallen by 5 %
B) fallen by 3.33 %
C) fallen by 2.33 %
D) risen by 3 %
E) risen by 1.8 %

Correct Answer:

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