3. Productivity and growth policies Consider a small island country whose only i

Question

3. Productivity and growth policies Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years 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 Labor Force (Workers,) 60 100 Output (Garments) 23,100 49,000 Physical Capital per Worker (Looms) Labor Hours (Hours) 3,300 3,500 Labor Productivity (Garments per hour of labor) Year 2026 2027 Physical Capital (Looms) 120 400 Based on your calculations, productivity from 2026 to 2027. in physical capital per worker from 2026 to 2027 is associated with in labor 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 Subsidizing research and development into new weaving technologies Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Offering free public education to every worker in the country Grade It Now Save & Continue Continue without saving

Explanation / Answer

Ans:

1) Physical capital per worker = Physical capital / Labor force

2026 = 120 / 60

= 2

2027 = 400 / 100

= 4

Labor productivity = output / labor hours

2026 = 23,100 / 3,300

= 7

2027 = 49,000 / 3,500

= 14

2) Increase,Increase

Increase in physical capital per worker from 2026 to 2027 in associated with increase in labor productivity from 2026 to 2027.

3) Following will apply

Subsidizing research and development into new weaving technologies.

Encouraging saving by allowing workers to set aside a portion of their earnings in tax free retirement accounts.

Offering free public education to every worker in the country

Advancement in technology increases productivity, savings increases investment and this boosts productivity over the longer term.Since only industry is weaving, offering free public education to every worker in the country would lead to greater productivity in the weaving industry.

Year Physical capital Labor force Physical capital per worker Labor hours output Labor productivity 2026 120 60 2 3,300 23,100 7 2027 400 100 4 3,500 49,000 14

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.