4. The catch-up effect Consider the economies of Sporon and Tralfamadore, both of which produce gaggles of gop using only tools and workers. Suppose that, during the course of 50 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 2018 and 2068. Sporon Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gaggles of gop) (Gaggles per worker) 2018 11 30 1,800 2068 16 30 2,160 Tralfamadore Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gaggles of gop) (Gaggles per worker) 2018 8 30 900 2068 13 30 1,620 Initially, the number of tools per worker was higher in Sporon than in Tralfamadore. From 2018 to 2068, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Sporon to rise by a amount than productivity in Tralfamadore. This illustrates the effect.

4. The catch-up effect Consider the economies of Sporon and Tralfamadore, both of which produce gaggles of gop using only tools and workers. Suppose that, during the course of 50 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 2018 and 2068. Sporon Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gaggles of gop) (Gaggles per worker) 2018 11 30 1,800 2068 16 30 2,160 Tralfamadore Physical Capital Labor Force Output Productivity Year (Tools per worker) (Workers) (Gaggles of gop) (Gaggles per worker) 2018 8 30 900 2068 13 30 1,620 Initially, the number of tools per worker was higher in Sporon than in Tralfamadore. From 2018 to 2068, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Sporon to rise by a amount than productivity in Tralfamadore. This illustrates the effect.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 35P: Say that the average worker in the U.S. economy is eight times as productive as an average worker in...

See similar textbooks

Similar questions

Why dues productivity growth in high-income economies not slow down as it runs into diminishing returns from additional investments in physical capital and human capital? Does this show one area where the theory of diminishing returns fails to apply? Why or why not?
Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?
An economy starts off with a GDP per capita of 5,000. How large will the GDP per capita be if it grows at an annual rate of 2 for 20 years? 2 for 40 years? 4 for 40 years? 6 for 40 years?
Refer back to the Work It Out about Comparing the Economies of Two Countries and examine the data for the two countries you chose. How are they similar? How are they different?
Are there other ways in which we can measure productivity besides the amount produced per hour of work?
Say that the average worker in the U.S. economy is eight times as productive as an average worker in Mexico. If the productivity of U.S. workers grows at 2 for 25 years and the productivity of Mexicos workers grows at 6 for 25 years, which country will have higher worker productivity at that point?
How did the Industrial Revolution increase the economic growth rate and income levels in the United States?
Say that the average worker in Canada has a productivity level of $30 per hour while the average worker in the United Kingdom has a productivity level of $25 per hour (both measured in U.S. dollars). Over the next five years, say that worker productivity in Canada grows at 1% per year while worker productivity intheUKgrows3%peryear.Afterfiveyears,whowill have the higher productivity level, and by how much?
Exercise 2: Growth and developmentCountries 1 and 2 have the production function: Yt = AiKαt L1−αt , where country 1 hasTotal Factor Productivity (TFP) of A1 = 25, country 2 has TFP A2 = 100, and α = 0.35for both. In the two countries population is constant and there is no technological progress.Every year capital depreciates by 6% in both countries. Country 1 saves 40% of output, andcountry 2 saves 20%.a) Write down the function of production per unit of labor. Suppose the two countriesstart with an initial capital stock (per unit of labor) of 500, what are the initial income andconsumption per unit of labor in both countries?b) Determine their steady state levels of capital, income and consumption per unit oflabor.c) Determine the difference in their steady state level of income per unit of labor, andhow much of that difference is due to differences in TFP and how much is due to differencesin capital per unit of labor.d) Suppose now that country 2 suddenly has access to the country 1…
1. Country A and B both have the production functionY = F (K, L) = K ½L ½or Y = K0.5 L0.5 a) What is the per-worker production function, y= f (k)? Please make sure to write specificfunctional form of the per-worker production function. b) Assume that neither country experiences population growth nor technological progressand that 4 percent of capital depreciates each year. Assume further that country A saves 24percent of output each year and country B saves 16 percent of output each year. Using youranswer from part a) and the steady-state condition, find the steady-state level of capital perworker for each country. Then find the steady-state levels of income per worker for eachcountry and steady-state level of consumption per worker for each country.
An increase in the initial stock of knowledge: Suppose we have two economies—let’s call them Earth and Mars—that are identical, except that one begins with astock of ideas that is twice as large as the other: A Earth 0 = 2 × A Mars0 Te two economies are so far apart that they don’t share ideas, and each evolves as a sepa-rate Romer economy. On a single graph (with a ratio scale), plot the behavior of per capita GDP on Earth and Mars over time. What is the efect of starting outwith more knowledge?
Please the answer correct please ASAP Don't answer by pen paper please. he golden rule level of capital refers to: Question 19Answer a. the level of capital that maximises output per worker. b. the level of capital that maximises the standard of living. c. the level of capital that maximises the level of output in the steady state. d. the level of capital that maximises consumption per worker. e. the level of capital that maximises consumption per worker in the steady state.