Make one change to the basic combined model that we studied in this appendix: let the production function for output be Y_t = A_tK_t^1/4L_yt ^3/4.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) 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.