A Suppose There Is a Technological Breakthrough That Increases the Productivity

a. Suppose there is a technological breakthrough that increases the productivity of all capital and, consequently, increases the demand for investment. Using the long-run model of the economy developed in Chapter 3, graphically illustrate the impact of the increased investment demand. Be sure to label: i. the axes ii. the curves iii. the initial eqilibrium values iv. the direction curves shift v. the terminal equilibrium values

b. State in words what happens to i. the real interest rate ii. nafional saving iii. investment iv. consumption v. output.