Question: Suppose for the U . S . that GDP is $ 2 0 trillion, the capital stock is $ 4 0 trillion, employment is 1

Suppose for the U.S. that GDP is $20 trillion, the capital stock is $40 trillion, employment is 150 million, hours worked are 250 billion, and the population is 300 million. Suppose further that Chinas (PPP dollar) GDP is $20 trillion, its capital stock is $25 trillion, employment is 600 million, hours worked are 1.25 trillion, and the population is 1.2 billion. Assume the Cobb douglas production function. What is the ratio of U.S. to Chinese capital/labor? How much does the difference in the capital-labor ratio contribute to the difference in labor productivity between the U.S. and China? How much does the difference in TFP levels contribute to the difference in labor productivity between the U.S. and China?

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