Question 4

4. The catch-up effect Consider the hypothetical economies of Hermes and Svarta, both of which produce crates of copia using only workers and tools. Suppose that, during the course of 30 years, the level of physical capital per worker rises by 4 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 2024 and 2054. Hermes Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Crates of copia) (Crates per worker) 2024 18 60 5,000 2054 22 60 7,200 Svarta Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Crates of copia) (Crates per worker) 2024 15 60 4,800 2054 19 60 7,200 Initially, the number of tools per worker was higher in Hermes than in Svarta. From 2024 to 2054, capital per worker rises by 4 units in each country. The 4-unit change in capital per worker causes productivity in Hermes to rise by a amount than productivity in Svarta. This illustrates the effect. Grade It Now Save & Continue5. Economic growth and public policy Suppose Hondamaha, a motorcycle manufacturing firm headquartered in Japan, builds a production plant in Arizona. This is an example of foreign 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. O Protecting property rights and enforcing contracts Increasing taxes on income from savings Pursuing inward-oriented policies Imposing restrictions on foreign ownership of domestic capital Which of the following are possible outcomes of rapid population growth? O A reduction in human capital per worker O A reduction in capital per worker An increase in technological knowledge O All of the above Grade It Now Save & Continue