Question

Mycenae is a simple Cobb-Douglas agricultural economy with constant returns to scale and competitive markets. Land and labor each receive 50% of output. Last year, real output grew by 3.5%. If land stock grew by 1% and labor supply grew by 2%, then growth was mostly _________.
O intensive growth
O extensive growth.

Answer 1

The term Growth refers to the process of Growing.It can also refer to an increase in size,number or strength

Explanation:

• A growth strategy that aims at the expansion of inputs like capital accumulation,labor force which result in  the growth of the aggregate output is referred to as the Extensive Growth Strategy.

In the above question we can see that the labour supply has increased by 2% ,in simple words their has been an expansion in the labor force by 2%.Thus the growth was mostly Extensive Growth