1. Suppose there is an economy with one household who cares only about consumption of a final good (clocks) and leisure. The household has h - 100. The household's preferences over consumption of clocks and leisure is given by the following utility function: u(C,!) - 2C +500 In((). There is a single firm which makes clocks. The firm uses household labour and a fixed amount of capital equal to K - 16 to produce clocks. The production function for producing clocks is given by Y - z (ND) .5 ( K)-5 Here z randomly fluctuates between zz - 12 and zy - 15. You will need to use the quadratic formula for this question. (1.A.) (35 points) Complete the first two columns of Table 1 for the two values that a can take. Use your answers to determine the qualitative predictions of this economy regarding the cyclical properties (procyclical, countercyclical, or acyclical) of consumption, real wages, labour hours, average labour pro- ductivity, and profits when there are technology shocks. Provide economic intuition to explain each of these cyclical properties. Table 1: Aggregate Variables Without Government With Government 2 = zz =12 2 = ZH = 15 2 = 21 =12 Variable Column 1 Column 2 Column 3 2014 LP* = YN Household Utility 2655.52