Consider a small island country whose only industry is weaving. The following ta

Question

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 lab our productivity. 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 lab our. Based on your calculations, in physical capital per worker from 2024 to 2025 is associated with in lab our productivity from 2024 to 2025. 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. Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Subsidizing research and development into new weaving technologies Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving

Explanation / Answer

Subsidizing research and development into new weaving technologies

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