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Chapter 18: Q. 1 - Critical Thinking Questions (page 409)

In terms of the basic arithmetic of economic growth, through what mechanism do improvements in labor and capital productivity help to boost the rate of growth of per capita real GDP?

Short Answer

Expert verified

Improvements in labor and capital productivity help to accelerate the rate of growth of per capita real GDP. Workers who are frequently interrupted at work benefit the most from telework.

Step by step solution

01

Step 1:Introduction to GDP growth

The monetary value of all finished goods and services produced in a country over a given time period is known as the gross domestic product (GDP).. GDP provides an economic snapshot of a country and is used to estimate the size and growth rate of an economy. GDP can be calculated using expenditures, production, or income in one of three ways.

02

The mechanism do improvements in labor and capital productivity 

Appropriate telework schedules boost labor productivity

Telework improves life satisfaction, which in turn improves productivity.

Telework, on the other hand, adds to the stress of juggling work and home responsibilities.

Telework is more efficient for workers who commute by train for an extended period of time.

Telework has a greater impact on workers who are frequently interrupted at work.

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Most popular questions from this chapter

For each of the following situations, explain which of the policy issues discussed in this chapter relates to the stance the institution has taken.

a. The World Bank offers to make a loan to a company in an impoverished nation at a lower interest rate than the company had been about to agree to pay to borrow the same amount from a group of private banks.

b. The World Bank makes a loan to a company in a developing nation that has not yet received formal approval to operate there, even though the government approval process typically takes 15months.

c. The IMF extends a loan to a developing nation's government, with no preconditions, to enable the government to make already overdue payments on a loan it had previously received from the World Bank.

Last year, \(100million in outstanding bank loans to a developing nation's government were not renewed, and the developing nation's government paid off \)50million in maturing government bonds that had been held by foreign residents. During that year, however, a new group of banks participated in a \(125million loan to help finance a major government construction project in the capital city. Domestic firms also issued \)50million in bonds and $75million in stocks to foreign investors. All of the stocks issued gave the foreign investors more than 10percent shares of the domestic firms.

a. What was gross foreign investment in this nation last year?

b. What was net foreign investment in this nation last year?

Some international policymakers argue that the world's poor require stronger "nudges, "such as policies that prevent them grow making "bad" choices. How might stronger nudges limit economic freedom and potentially slow economic growth? (What Does reducing the range of people's choices expand or limit their economic freedom??

Why do you suppose that many observers regard India's agricultural productivity issues related to land use as analogous to the problems arising from dead capital?

For each of the following situations, explain which of the policy issues discussed in this chapter relates to the stance the institution has taken.

a. The IMF extends a long-term loan to a nation's government to help it maintain publicly supported production of goods and services that the government otherwise would have turned over to private companies.

b. The World Bank makes a loan to companies in an impoverished nation in which government officials typically demand bribes equal to 50percent of companies' profits before allowing them to engage in any new investment projects.

c. The IMF offers to make a loan to banks in a country in which the government's rulers commonly require banks to extend credit to finance high-risk investment projects headed by the rulers' friends and relatives.
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