Assume that the switch in the circuit in (Figure 1) has been in position a for a

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Assume that the switch in the circuit in (Figure 1) has been in position a for a long time and that at t = 0 it is moved to position b. Express your answer to three significant figures and include the appropriate units. This question asks you to analyze in more detail the two- sector endogenous growth model presented in the text v Rewrite the production function for manufactured goods in terms of output per effective worker and capital per effective worker. In this economy, what is break- even investment (Jthg amount of investment needed to keep capital per effective worker constant)? Write down the equation of motion fork, which shows k as saving minus break- even investment. Use this equation to draw a graph showing the determination of steady-state k. CJiüöfc This graph will look much like those we used to analyze the Solow model.) In this economy, what is the steady- state growth rate of output per worker Y/ L? How do the saving rate s and the fraction of the labor force in universities u affect this steady-state growth rate? Using your graph, show the impact of an increase in u. (Hint: This change affects both curves.) Describe both the immediate and the steady- state effects. Based on your analysis, is an increase in u an unambiguously good thing for the economy? Explain.

Explanation / Answer

part D is not correct. how did you get to the answer ?

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