1.Suppose that we modify the Solow growth model by allowing long-run technological progress. That is suppose z = 1 for convenience and that there is labor-augmenting technological progress, with the production function

Y = F (K, bN)

Where b denotes the number of units of 'human capital' per worker, and bN is 'efficiency units' of labor. Letting denote future human capital per worker, assume that = (1+f)b where f is the growth rate in human capital

a)Show that the long-run equilibrium has the property that = is a constant. At what rate does aggregate output, aggregate consumption, aggregate investment, and per capita income grow in this steady state? Explain

b)What is the effect of an increase in f on the growth in per capita income? Discuss relative to how the standard Solow growth model behaves.