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Productivity and growth policies Consider a hypothetical small island nation in which the only industry is weaving. The following table displays information about the economy
Productivity and growth policies
Consider a hypothetical small island nation in which the only industry is weaving. The following table displays information about the economy over a two year period.
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.
tableYeartablePhysical CapitalLoomstableLabor ForceWorkerstablePhysical Capital per WorkerLoomstableLabor HoursHourstableOutputTapestriestableLabor ProductivityTapestries per hour of labor
productivity from to
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 taxfree retirement accounts
Subsidizing research and development into new weaving technologies
Imposing a tax on looms
Offering free public education to every worker in the country
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