By NEAS - 8/15/2018 4:07:15 PM
Macro Module 3 Cobb-Douglas Production Function basic practice exam questions
(The attached PDF file has better formatting.)
Question 3.1: Cobb-Douglas production function
An economy has a Cobb-Douglas production function: Y = AKα L(1-α), with α = 81%.
If labor increases 3.27%, capital increases 5.40%, and the technology level increases 4.23%, what is the increase in real GDP?
Answer 3.1: 3.27% × (1 – 81%) + 5.40% × 81% + 4.23% = 9.23%
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