Make one change to the basic combined model that we studied in this appendix: let the production function for output be

That is, we’ve reduced the exponent on capital and raised it on labor to preserve constant returns to objects.

(a) Solve for the growth rate of output per person along a balanced growth path. Explain why it is different from the model considered in the appendix.

(b) (Hard) Solve for the level of output per person along a balanced growth path. Explain how and why this solution differs from what we found in the appendix.

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