Question

Say that the economy is in steady state. Assume now that the government implements an important educational program that makes college more accessible to the population. As a result, there is an improvement of technology and productivity in the economy. The other parameters in the economy remain constant. Comparing the new steady state with the original steady state, you can claim that

Answer 1

Answer:

The country should become more efficient and productive as a result of the new educational program and the improvement in new technologies. This increases economic growth even if the rest of the economic factors remain the same. Higher economic growth increases the real GDP faster, decreasing production costs and increasing aggregate demand (better salaries earned by highly educated people) and aggregate supply.