Explain the economic meaning of the residual

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In the country of Growlandia the labor force grows by 3% per annum, while the capital stock grows by 4% per annum. Suppose 40% of national income goes to labor. a. Suppose the country’s actual rate of growth is 5% per annum. Calculate the value of the residual. SHOW YOUR WORK. b. Explain the economic meaning of the residual. What would it mean if a were negative? c. Suppose the population growth rate is the same as the rate of growth of the labor force (3%). Is the growth rate enough to maintain the standard of living? Is it enough to ensure development? d. In developing countries, which determinant of economic growth tends to play the biggest role (biggest contribution to growth)?

Reference no: EM131003656

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