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4. The catch-up effect Consider the hypothetical economies of Hestiatia and Vanaheim, both of which produce crates of copia using only workers and tools. Suppose
4. The catch-up effect Consider the hypothetical economies of Hestiatia and Vanaheim, both of which produce crates of copia using only workers and tools. Suppose that, during the course of 35 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 2020 and 2055. Hestiatia Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Crates of copia) (Crates per worker) 2020 18 60 3,600 2055 23 60 4,320 Vanaheim Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Crates of copia) (Crates per worker) 2020 15 60 1,800 2055 20 60 3,240 Initially, the number of tools per worker was higher in Hestiatia than in Vanaheim. From 2020 to 2055, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Hestiatia to rise by a amount than productivity in Vanaheim. This illustrates the effect
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