Attempts: Keep the Highest: /1 2

Economics Nov 25, 2020

Attempts: Keep the Highest: /1 2. Working with Numbers and Graphs Q2 Consider the production function Real GDP-TX(L+K), where is the technology coefficient, Lis units of labor, and Kis units of capital. Suppose T = 0.3, L = 3, and K = 3, as shown here: Real GDP-0.3x (3+3) What will happen to Real GDP if technology increases from 0.3 to 0.4, whereas labor and capital do not change? Real GDP will fall from 1.8 units to 2,4 units. Real GDP will rise from 1.8 units to 2.4 units. Real GDP will not change Grade It Now Save & Continue Continue without saving

Expert Solution

Q)Ans:-

Step1)

Given,

Real GDP= T×(L+K)

When T=0.3, ?????? L=3 and K=3

then Real GDP= 0.3 ×(3+3)

=1.8

NOW when T increases from 0.3 to 0.4

then Real GDP= 0.4×(3+3)

=2.4

?so from above discussion we conclude option second is correct.

Real GDP rises 1.8 to 2.4 units.

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