Consider the economy analyzed in Section 3.3. Assume that + < 1 and n >
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Consider the economy analyzed in Section 3.3.
Assume that θ + β < 1 and n > 0, and that the economy is on its balanced growth path. Describe how each of the following changes affects the gA = 0 and gK = 0 lines and the position of the economy in ( gA, gK) space at the moment of the change:
(a) An increase in n.
(b) An increase in aK .
(c) An increase in θ.
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