1. (10 marks) In Lecture Note 1, we argued that an increase in the capital stock ¯k has a similar qualitative effect on the equilibrium of the economy as an increase in z, but we did not formally derive this effect.
1. (10 marks) In Lecture Note 1, we argued that an increase in the capital stock ¯k has a similar qualitative effect on the equilibrium of the economy as an increase in z, but we did not formally derive this effect. Do this now. Specifically, find expressions for dl/d¯k and dc/d¯k (analogous to the expressions […]
