4. Drop down choices

a. larger, smaller

b. natural resources, catch-up, human capital, technology

4. The catch-up effect Consider the economies of Hermes and Gobbledigook, both of which produce gobs of goo using only tools and workers. Suppose that, during the course of 20 years, the level of physical capital per worker rises by 5 tools per worker in each economy, but the size of each labor force remains the same. Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2021 and 2041. Hermes Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gobs of goo) (Gobs per worker) 2021 7 30 1,800 2041 12 30 2,160 Gobbledigook Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gobs of goo) (Gobs per worker) 2021 4 30 900 2041 9 30 1,620 Initially, the number of tools per worker was higher in Hermes than in Gobbledigook. From 2021 to 2041, capital per worker rises by 5 units in each country. The 5unit change in capital per worker causes productivity in Hermes to rise by a V amount than productivity in Gobbledigook. This illustrates the V effect. 5. Economic growth and public policy Suppose Yamahonda, a Japanese-owned motorcycle manufacturer, builds a production plant in Alabama. This is an example of foreign 7 investment in the United States. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. l] Pursuing inward-oriented policies l] Increasing taxes on income from savings Ci Protecting property rights and enforcing contracts l] Providing tax breaks and patents for firms that pursue research and development in health and sciences Which of the following are possible outcomes of rapid population growth? b A reduction in human capital per worker T) A reduction in capital per worker A An increase in technological knowledge h All of the above 3. The meaning of saving and investment Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Musashi buys a government bond. O O Sean takes out a mortgage for a new home in Detroit. O O Rina borrows money to build a new lab for her engineering firm. O O Yvette purchases stock in Goohoo, an information technology company. O O