6. Consider a closed-economy market-clearing model with the following pro-\duction function:
\(F(K, L) = AK^{1/4}L^{3/4}\),
where \(K\) denotes capital, \(L\) denotes labor, and \(A > 0\) is referred to as total\factor productivity. Assume the supply of capital increases by 20%. Calculate\the resulting percentage change in the output, in the real wage, and in the real\rental rate. [In answering this question, you are allowed to use the approxima-\tions regarding percentage changes; see slide 4 of the math review (slide set\2)].
7. Consider the following closed-economy market-clearing model (notation\as in class).