Question

Dropdown options are Increase/Decrease

3. Productivity and growth policies Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Physical Capital (Looms) Labor Force (Workers) Physical Capital per Worker (Looms) Labor Hours Output (Hours) (Garments) Labor Productivity (Garments per hour of labor) Year 2030 2031 2030 300 480 300 100 100 4,000 4,200 36,000 50,400 120 Based on your calculations, associated with in physical capital per worker from 2030 to 2031 is in labor productivity from 2030 to 2031. Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply. Encouraging saving by allowing workers to set aside a portion of their earnings in tax- free retirement accounts Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Subsidizing research and development into new weaving technologies Imposing a tax on looms

Answer 1

3. Productivity and growth policies Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Physical Capital (Looms) Labor Force (Workers) Physical Capital per Worker (Looms) Labor Labor Hours Output Productivity (Hours) (Garments) (Garments per hour of labor) 4,000 36,000 36000/4000=9 4,200 50,400 50400 4200=12 Year 2030 2031 300 100 480 120 300/100=3 480/120=4 Based on your calculations, an increase in physical capital per worker from 2030 to 2031 is associated with an increase in labor productivity from 2030 to 2031. Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply. Encouraging saving by allowing workers to set aside a portion of their earnings in tax- free retirement accounts Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Subsidizing research and development into new weaving technologies mal Imposing a tax on looms