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In: Economics

The President of Lisavia (a small country) wants to increase productivity in his country. He has...

The President of Lisavia (a small country) wants to increase productivity in his country. He has recently become aware of an economic principle that suggests that as a nation's productivity rises, its income will rise and therefore its standard of living will also rise. You have just been appointed as the economic advisor for Lisavia. Discuss three economic policies you might advise the President to pursue in order for his country to achieve this increased standard of living.

Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.

Solutions

Expert Solution

Answer:-

As an economic advisor to Lisavia I would suggest the following economic policies to raise productivity and increase the standard of living:-

1) Imposing tariffs and quotas:- This would reduce the import of goods and increase inhouse production of such goods.Employment opportunities would increase within the country and goods would be available at cheaper rates due to increased production.. Thus people can purchase other things from the money saved and improve their standard of living.

2) Improving infrastructure:- If the quality of bridges highways airports and other publicly owned capital is improved it will raise productivity and improve the standard of living .

3) The establishment of well defined property rights will inCrease productivity and standard of living. The lack of formal ownership means that resources are underutilised; ownership would confer its holder the abiity to use the land as a collateral security to purchase farm machinery that could increase farm productivity to a level in excess to what the family consumes. This surplus production is then traded to attain other goods and sevices the family does not produce.eg. furniture clothing etc.and thus raise living standards.

Encouraging saving and investment:- Policies that lead to investment in human capital and improvement in technology. For eg If the tax rate that people have to pay on savings account is lowered the amount that A saves would be more; thus enabling him to have more funds to invest.   


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