Question

Suppose you were in charge of establishing economic policy for a small island country whose only industry is fishing. When people aren't fishing, they're enjoying leisure time with their families. Which of the following policies would lead to greater economic growth? Check all that apply, Imposing a tax on fishing boats (a form of capital) Lowering the income tax, assuming that it encourages people to work longer hours Subsidizing research and development into new fishing technologies O Offering free public education to increase the human capital of the country What is the best measure of labor productivity in this economy? O Fish caught per year O Fish caught per hour spent fishing O Fish caught per fishing boat Fish caught per citizern The leader of the country decides how many people should fish each day, and how many fishing boats the country should have. Suppose she suggests increasing the number of people assigned to fishing without changing the number of fishing boats. The effect of this policy would be the per-worker production function, resulting in in capital per worker and ▼in output per worker.

TEXT Alternative:

Suppose you were in charge of establishing economic policy for a small island country whose only industry is fishing. When people aren't fishing, they're enjoying leisure time with their families.

Which of the following policies would lead to greater economic growth? Check all that apply.

Imposing a tax on fishing boats (a form of capital)

Lowering the income tax, assuming that it encourages people to work longer hours

Subsidizing research and development into new fishing technologies

Offering free public education to increase the human capital of the country

What is the best measure of labor productivity in this economy?

Fish caught per year

Fish caught per hour spent fishing

Fish caught per fishing boat

Fish caught per citizen

The leader of the country decides how many people should fish each day, and how many fishing boats the country should have. Suppose she suggests increasing the number of people assigned to fishing without changing the number of fishing boats. The effect of this policy would be the per-worker production function, resulting in in capital per worker and in output per worker.

The following graph shows the production possibilities frontier of an economy that produces cars and computers. Suppose that a rise in this economy's savings rate allows for investment in modern, efficient manufacturing plants.

Adjust the production possibilities frontier (PPF) to show the economy's new production possibilities after the rise in the savings rate.

Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.

PPF051015241680QUANTITY OF CARS (Millions)QUANTITY OF COMPUTERS (Millions)PPF   

Suppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars) before the rise in the savings rate described above.

Which of the following events would be most likely to lead to the rise in the savings rate you just illustrated?

Decreasing production of investment and consumption goods

Increasing production of investment goods and decreasing production of consumption goods

Increasing production of investment and consumption goods

Decreasing production of investment goods and increasing production of consumption goods