4. The catch-up effect Consider the hypothetical economies of Thalassa and Vanaheim, 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 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 2021 and 2051. Physical Capital Year (Tools per worker) 2021 16 2051 21 Thalassa Labor Force (Workers) Output (Crates of copia) Productivity (Crates per worker) 60 3,600 60 4,320 Vanaheim Year Physical Capital (Tools per worker) Labor Force (Workers) Output Productivity 2021 13 60 2051 18 60 (Crates of copia) (Crates per worker) 1,800 3,240 Initially, the number of tools per worker was higher in Thalassa than in Vanaheim. From 2021 to 2051, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Thalassa to rise by a amount than productivity in Vanaheim. This illustrates the effect.

4. The catch-up effect Consider the hypothetical economies of Thalassa and Vanaheim, 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 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 2021 and 2051. Physical Capital Year (Tools per worker) 2021 16 2051 21 Thalassa Labor Force (Workers) Output (Crates of copia) Productivity (Crates per worker) 60 3,600 60 4,320 Vanaheim Year Physical Capital (Tools per worker) Labor Force (Workers) Output Productivity 2021 13 60 2051 18 60 (Crates of copia) (Crates per worker) 1,800 3,240 Initially, the number of tools per worker was higher in Thalassa than in Vanaheim. From 2021 to 2051, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Thalassa to rise by a amount than productivity in Vanaheim. This illustrates the effect.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

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Explain why converging economies may present a strong argument for limiting flows of capital but not for limiting trade.
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