Look at the scenario Technological Progress and Productivity Growth in Techland. What share of the growth rate of real GDP per capita was attributable to higher total factor productivity? a. 2.0% b. 5% c. 8.75% d. 6.5%

You for got to give the scenario. So, I will put the scenario below so the question is complete and then give the explanation and

(Scenario: Technological Progress and Productivity Growth in Techland)

In Techland , from 1980 to 2010, holding technology and human capital fixed, increasing physical capital per worker from $25,000 to $100,000 would have led to a doubling of real GDP per worker, from $40,000 to $80,000. However, not only did physical capital per worker increase from $25,000 to $100,000, but technological progress shifted the productivity curve upward so that real GDP per worker actually increased from $40,000 to $320,000.

Explanation:

Total factor productivity represents the increase in total production which is in excess of the increase that results from increase in inputs. Productivity is a measure of the relationship between outputs and inputs. This means it equals output divided by input. There are two measures of productivity that consist of labor productivity, which equals total output divided by units of labor and total factor productivity, which equals total output divided by weighted average of the inputs

Thus, we should have, based on the scenario, that 5% share of the growth rate of real GDP per capita was attributable to higher total factor productivity

5%

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