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INSTRUCTIONS: ANSWER ALL QUESTIONS IN THE SPA

FOR EACH OF THE FOLLOWING STATEMENTS, INDICATE WHETHER

THE STATEMENT IS TRUE OR FALSE AND EXPLAIN YOUR ANSWER

You are given the following Cobb$-$Douglass production function:

$Y=K^{\frac{1}{4}}{H}^{\frac{1}{3}}(AL{)}^{\frac{5}{2}},$

Where,

$K=$ Physical capital; $H=$ Human capital; $L=$ Labour; ;$A=$ Effectiveness of labour.

Given the following growth rates: Growth rate of $Y=7\mathrm{.}7\%$; Growth rate of $K=5\mathrm{.}8\%$;

Growth rate of $H=7\mathrm{.}2\%$; Growth rate of $L=2\mathrm{.}8\%.$

It can be concluded that joint contribution of Physical and Human capital

contribution to the growth rate of output is $50\%.$

The fiscal and monetary policy multipliers approach their limiting values of $0$ and

$1$ respectively when crowding out is complete.