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If output is given by a Cobb-Douglas production function, real GDP is growing at 4%, the capital to labor ratio is constant, and the labor force is growing at 1.5%, what is the growth rate of the Solow residual

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Based on the capital to labor ratio and the labor force growth rate, the growth rate of the Solow residual is 2.5%.

What is the Solow Residual?

This is the part of the growth in real GDP that is not as a result of an increase in capital or labor. The capital remained at zero growth and the labor was growing at 1.5%.

The Solow residual growth rate will then be:

= Real GDP growth rate - Labor force growth

= 4% - 1.5%

= 2.5%

Find out more on the Solow model at https://brainly.com/question/15687941.

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