Question: 1. (10 points). Suppose a country's production function is given by Y = AKO.5 10.5 Where Y is aggregate output, A represents the productivity of

1. (10 points). Suppose a country's production function is given by Y = AKO.5 10.5 Where Y is aggregate output, A represents the productivity of available technology, K is capital, and L is labor. Initially, A is equal to 10. If capital equals 100 and labor equals 400, what is a. aggregate output? b. the total amount of output paid to labor? c. the total amount of output paid to capital? d. the fraction of income paid to labor? e. the fraction of income paid to capital? f. the real wage? g. the real rental price of capital? h. Now suppose that, due to technological change, A increases to 10.1. (1) Recompute parts a-g for the new situation and compare with your previous answers. ( 2 ) Does the technological change increase the real wage relatively more than the real rental price of capital? Explain

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