Question

Initially, the number of tools per worker was higher in Sporon than in Gobbledigook. From 2020 to 2070, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Sporon to rise by a __________ amount than productivity in Gobbledigook.

This illustrates the __________ effect.

Answer 1

smaller

Catch up effect

Step-by-step explanation:

Catch up effect is theory which gives an idea that poor countries economy per capita incomes will rise at a higher rate than of the wealthy or rich countries.

In the given scenario the Sporon will rise by a smaller rate that of Gobbledigok because of the catch up effect. The Sporon has high number of tools per worker than Gobbledigook. Higher capital investments lead to higher per capita income growth.