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Question
In the country of Aargh, in the equation for TFP,Y= A× Ka× L1−a,the coefficient is a= 2. The capital stock is growing 6 percent per year, employment is growing 1 percent per year, and output is growing 4 percent per year. In the country of Blargh, the coefficient is a= 25, the capital stock is growing 10 percent per year, employment is growing 2 percent per year, and output is growing 5 percent per year. In which country is TFPgrowing the fastest? In which country is output per worker growing the fastest? Explain your answer and show all your calculations.Answer
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