Economics Q120

120Consider the following Solow growth accounting equation: Potential output growth = 2.0 + 0.8 * Growth of Labor + 0.3 * Growth of capital The coefficient on the growth rate of labor (0.8) in this equation is best interpreted as:

Option : C
Explanation : In the standard Solow growth accounting equation, the coefficient on each factor’s growth rate is its share of income.

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