Problem
Total factor productivity and investment: Suppose the TFP parameter, A, increases permanently.
(a) What happens to the desired capital stock?
(b) What happens to investment?
(c) Hard: What happens to the investment rate in the long run? Why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.