Consider the Endogenous Growth Model with the representative consumer. The efficiency

parameter of human capital accumulation technology is b = 5. The total productivity factor is

given by z = 60. Denote by Ht the human capital accumulated in period t, and by ut the time

spent working in period t. Assume u0 = 0.85 and H0 = 1.

1. Compute the consumer consumption Ct for periods 0 and 1.

2. Starting from year 2, the government applies a policy that raises b to 9. Now assume that in

face of this increased value of human capital in the economy, the consumer responds optimally

by decreasing ut to 0.75. Calculate the consumption Ct for periods 2 and 3