In the endogenous growth model, suppose that there are three possible uses of time. Let u denote the fraction of time spent working, s the fraction of time spent neither working nor accumulating human capital (call this unem- ployment), and 1 – u – s the fraction of time spent accumulating human capital. Assume that -

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Chapter1: Financial Statements And Business Decisions
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10. In the endogenous growth model, suppose that
there are three possible uses of time. Let u
denote the fraction of time spent working, s
the fraction of time spent neither working nor
accumulating human capital (call this unem-
ployment), and 1 – u – s the fraction of time
spent accumulating human capital. Assume that
z = 1 and b = 4.2. Also assume that the econ-
omy begins period 1 with 100 units of human
capital.
(a) Suppose that for periods 1, 2, 3, ..., 10,
-
.7 and s
0.05. Calculate aggregate
U =
S =
consumption, output, and the quantity of
human capital in each of these periods.
Transcribed Image Text:10. In the endogenous growth model, suppose that there are three possible uses of time. Let u denote the fraction of time spent working, s the fraction of time spent neither working nor accumulating human capital (call this unem- ployment), and 1 – u – s the fraction of time spent accumulating human capital. Assume that z = 1 and b = 4.2. Also assume that the econ- omy begins period 1 with 100 units of human capital. (a) Suppose that for periods 1, 2, 3, ..., 10, - .7 and s 0.05. Calculate aggregate U = S = consumption, output, and the quantity of human capital in each of these periods.
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