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Consider the human capital growth model with the representative consumer. The efficiency pa- rameter of human capital accumulation technology is b. The total productivity factor is given by 2 = 1.5. Denote by H, the human capital accumulated in period t, and by u the time spent working in period t. Assume the initial human capital is Ho = 1. Now, assume the consumer has to choose between (ui, b) = (0.9, 10.35) and (uz, b2) = (0.8,5.20). 1. Using the predictions of the Endogenous Growth Model for the consumption path, which set of (u,b) will you recommend to the consumer in the long term. (06pts] 2. After how many years is your recommendation valid? (09pts) Consider the human capital growth model with the representative consumer. The efficiency pa- rameter of human capital accumulation technology is b. The total productivity factor is given by 2 = 1.5. Denote by H, the human capital accumulated in period t, and by u the time spent working in period t. Assume the initial human capital is Ho = 1. Now, assume the consumer has to choose between (ui, b) = (0.9, 10.35) and (uz, b2) = (0.8,5.20). 1. Using the predictions of the Endogenous Growth Model for the consumption path, which set of (u,b) will you recommend to the consumer in the long term. (06pts] 2. After how many years is your recommendation valid? (09pts)

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