1. Technical Change. [a] According to I:Greg Clark, Asians before the industrial revolution were much cleaner than Europeans. Explain, using the the g{C,r'N] population~growth curve of the Malthusian model: how this might account for steadystate differences between Europe and Asia at that time in perrcapita consumption. 1. Malt-hue argued that technical progress would not cause living standards in the long run to rise. What hay assumption of the Malthusian model turned out he wrong after the industrial revolution? Why did this change? fb] Endogenous Iiechnical Change. Consider the \"Public MED Mod " we studied in class. Output of goods is given by Y = F[K.(1u}EL] where n L Erection of labour in research is constant, E is the stock of ideas. and L'tE = gnjE. Suppose that the production function is Y = {[1 n} EL)\" K 1\" . Consider a balancedgrowth pat-h where E and K are growing at the same rate. 1. Show that we can write the relation bet-ween output and capital as Y = AEL\" where A is an unknown constant that you can solve for. ii. Does output in this economy have constant returns to scale? Does it have diminishing marginal returns to capital? Be sure to explain your rmoning and how your answer depends on whether E is a variable input or a xed factor. iii. Canada's share of GDP spent on RcD is signicantly lower than that of China or the LES. According to this model1 would an increase in RELD spending malts Canada better off? [You may assume that otherwise Canada's economy is just like that of China and the US] . Use a diagram of the timepath of consumption in your