Question

Suppose that U.S. real GDP (output) grew by 2 percent between 2014 and 2015. During this time, real GDP per capita (output per worker in our model) grew by 1 percent. If the U.S. economy is in steady state, the rate of technological progress (gA ) is approximately:________

a. 1%
b. 2%
c. 3%
d. None of the options

Answer 1

The answer is A.

Step-by-step explanation:

Technological progress is the discovery of new and improved ways of producing goods and its estimation is given below:

Growth in the real GDP minus the real GDP per capita.

The formula above is known as Solow model

The rate of technological progress is therefore 1 percent (2 percent of US real GDP - 1 percent real GDP per capita)