Assumptions of the model 1.Technology is fixed. 2.The economy's supplies of capital and labor are fixed at K=K and L=L 3.Output is determined by the fixed factor supplies and the fixed state of technology: Y=F(K,L) Return CHAPTER 3 National Income slide 6 CHAPTER 3 National Income slide 6 Assumptions of the model 1. Technology is fixed. 2. The economy’s supplies of capital and labor are fixed at 3. Output is determined by the fixed factor supplies and the fixed state of technology: K K L L = = and 1 Y F K L = ( ) , Return