Productivity and growth policies Consider a small island cou

?Productivity and growth policies

Consider a small island country whose only industry is fishing. 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 Physical Capita Labor Force Physical Capital per Worker Labor Hours Output Labor Productivity (Hours) 2,700 6,500 (Fishing poles) Year (Fishing poles) (Workers) 2023 2024 (Fish) (Fish per hour of labor 16,200 29,250 240 60 40 6 300 100 30 4.5 in labor Based on your calculations, productivity from 2023 to 2024 in physical capital per worker from 2023 to 2024 is associated with 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 fishing industry? Check all that apply. Sharply increasing the interest rate on student loans to people pursuing advanced degrees in fishing Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Imposing a tax on fishing poles Subsidizing research and development into new fishing technologies

Solution

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

In 2023; Physical capital per worker = 240/60 = 4

In 2024; Physical capital per worker = 300/100 = 3

2. Labor productivity is correctly filled.

3. Decrease; decrease

4. Subsidizing research and development into new fishing technologies.

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