4. The catch-up effect Consider the economies of Hermes and Gribinez, both of which produce gaggles of gop using only tools and workers. Suppose that, during the course of 20 years, the level of physical capital per worker rises by 4 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 2015 and 2035. Hermes Productivity Physical Capital Labor Force Output (Gaggles of gop) (Tools per worker) (Workers) (Gaggles per worker) Year 2015 11 30 3,000 2035 15 30 3,600 Gribinez Productivity Physical Capital Labor Force Output (Tools per worker) (Workers) (Gaggles of gop) (Gaggles per worker) Year 2015 8 30 2,400 2035 12 30 3,600 Initially, the number of tools per worker was higher in Hermes than in Gribinez. From 2015 to 2035, capital per worker rises by 4 units in each country. The 4-unit change in capital per worker causes productivity in Hermes to rise by a amount than productivity in Gribinez. This illustrates the effect.

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Consider the hypothetical economies of Thalassa and Pelheim, both of which produce cases of argo using only workers and tools. Suppose that, during the course of 25 years, the level of physical capital per worker rises by 4 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 2043. Physical Capital Year (Tools per worker) 2018 13 2043 17 Year 2018 2043 Physical Capital (Tools per worker) 10 14 Thalassa Labor Force (Workers) 60 60 Output (Cases of argo) 6,000 7,200 Pelheim Labor Force (Workers) 60 60 Output (Cases of argo) 4,800 7,200 Productivity (Cases per worker) Productivity (Cases per worker) Initially, the number of tools per worker was higher in Thalassa than in Pelheim. From 2018 to 2043, capital per worker rises by 4 units in each country. The 4-unit change in capital per worker causes productivity in Thalassa to rise by a amount…