Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Find out more

Basic Question 3 of 18

According to neoclassical model, growth in labor productivity depends on:

I. capital deepening.
II. technological progress.
III. labor force growth.
Check Answer Previous Q Next Q Print

User Contributed Comments 3

User Comment
danubian Why capital deepening as well? The formula is : growth in TFP/1 - alpha
akirchner1 Workers (labor) use things like machines and computers (capital) etc to be productive. The worker can get more output done than if they didn't have those. But a worker can only use so many machines and computers to complete a job. To complete the job more efficient or faster, technology improvements need to be made to the machine or computer to increase the workers output.
davidt87 alpha is capital's share of output. so an increase in alpha will make the numerator smaller and therefore the output per worker greate
You need to log in first to add your comment.
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

compare classical growth theory, neoclassical growth theory, and endogenous growth theory;

explain and evaluate convergence hypotheses;

describe the economic rationale for governments to provide incentives to private investment in technology and knowledge;

CFA® 2025 Level II Curriculum, Volume 1, Module 9.