The question is regarding the augmented solow model.

3. Consider the Augnered Solow Model including growth in both labor augmenting pro-duc tivity and population. Suppose the economy features a CobbDouglas aggregate production function r. = M: was {a} In words, describe 1srhat labor augmenting productivity is. {b} Derive the equation which describes: hos.r capital per ecient unit of labor evolves over time {c} Suppose the economy is initially in steady state. Suppose at time t there is a surprise increase in z 1which is expected to last forever. Honsr 1will this impact the steady state capital stock per elcient unit of labor? What about the perefcient unit values of consumption and output? {d} Suppose the economy is initially in steady state. Suppose at time t there is a surprise increase in A 1which is expected to last forever. Hos.r will this impact the steady state capital stock per efcient unit of labor? What about the perefcient unit values of consumption and output? {e} Both A and z are measures of productivity. Given that, how can you reconcile the results of parts {c} and {d}? HINT: it may be easier to do this by transfonning the variables into another fonn