Question

Suppose India has a per capita GDP that is .074 times the United States GDP. It has a capital-per-person ratio that is .035 times that of the United States. Compared to the United States, the implied value of total factor productivity for India is approximately a. .30. b. .07. c. .12.d. .23.

Answer 1

To find the implied value of total factor productivity for India, we can use the formula: Total factor productivity = Per capita GDP / Capital per person ratio. Given the values provided, the implied value of total factor productivity for India is approximately 2.114.

Step-by-step explanation:

To find the implied value of total factor productivity for India, we can use the formula:

Total factor productivity = Per capita GDP / Capital per person ratio

Given that India's per capita GDP is 0.074 times the United States GDP and its capital-per-person ratio is 0.035 times that of the United States, we can substitute these values into the formula:

Total factor productivity = 0.074 / 0.035 = 2.114

Therefore, the implied value of total factor productivity for India is approximately 2.114.

Answer 2

D

23

Step-by-step explanation:

23

The United States is standardized to a value of 1 in this problem. The implied value of TFP is equal to the ratio of output per person divided by the capital-to-labor ratio raised to the 1/3 power.