For each of the following, explain how the event or initiative should impact fut
ID: 1108423 • Letter: F
Question
For each of the following, explain how the event or initiative should impact future national production growth and which part of the production function (A, K, and/or L) it should effect.
a) An education and training initiative for workers to make them better at their jobs.
b) A sharp decline in the National Science Foundation grants for scientific research.
c) Hugo Chavez nationalizes his country’s private cell phone service providers.
d) A cut in the corporate tax deduction for research and development spending.
Explanation / Answer
a) An education and training initiative for workers to make them better at their jobs. This initiative will affect the labour (L) of the production function and it will incraese the future national [production growth. This is because providing education and training to the workers will lead to the increase in productivity of the workers and they will look for for more specialized jobs as they will become more efficient.
b) A sharp decline in National Science Foundation grants for scientific research. This initiative will affect technology of the production function (A) and it will lead to decline in future national production. This is because when there is decline in grants for scientific research then there will be decline in innovation or upgradtion in technology. As technology will become outdated with time hence there will be decline in future national production with this initiative.
c) Hugo Chavez decline in the nationalizes his country's private cell phone service providers. This initiative will affect capital (K) of the production function. As nationalization will lead to more regulationand controls on the cell phone service providers this initiative will lead to decline in future national production.
d) A cut in corporate tax deduction for research and development spending. This initiative will affect technology (A) of the production function and it will lead to increase in future national production. As cut in tax rates will give more incentives to corporates for research and development. This will lead to more technology upgradation and innovation. Hence there will be increase in future nation national production.
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