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Consider the following modifications of the model (separately one by one). For each of the modifications, describe which of the five equations would change and
Consider the following modifications of the model (separately one by one). For each of the modifications, describe which of the five equations would change and how, and explain why. Be brief but precise. You do not need to solve anything. a) A fraction a of the labor force is used to run the government administration and cannot be used in the productive process. b) The production technology exhibits increasing returns to scale. 3 c) Part of the produced output in the amount Xt is exported abroad and cannot be used domestically
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