Mathematics · Economic Growth Models
Let aggregate output be determined by the Cobb-Douglas production function Q = Kα L1 - α, where α = 0.40. Suppose capital (K) and labor (L) grow at the rates of 10% and 20% respectively. The growth rate of aggregate output will be:
- 112%
- 216%
- 316%✓
- 418%
Correct answer
16%
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