Suppose there are two types of individuals in an economy: (college) educated and uneducated. Each uneducated has 1x units of labor while each educated has 1+x units such that 1 > x > 0, and suppose both supply their labors inelastically in each period. The parameter x measures the returns to education. The production function is in the form of F(A, K, LE, LU ) = AK (1+x)LE + (1x)LU 1 , where LE and LU are total employment of educated and uneducated, respectively, and (1+x)LE and (1x)LU are total employment units. The parameter is such that 0 < < 1. Derive the labor demand for educated and uneducated. We will analyze two scenarios separately here. In the first one, suppose the workforce of the country increased permanently at time t , and all the new entrants to the workforce are educated. In the second one, suppose returns to education increased from x to x permanently at time t such that 1 > x > x. What happens to wages and unemployment of educated and uneducated in short run and long run under both of these scenarios? Would you use monetary policy under any of these scenarios? Assume that job finding happens instantly when there is a job vacancy. Explain in detail by showing the changes in the relevant market.