Exogenous growth model

The exogenous growth model is like baking a cake. In order to make a cake, you need ingredients and a recipe. The exogenous growth model is like the recipe that governments or companies use to grow the economy.

The recipe has certain ingredients like technology, capital, land, and labor. These ingredients are like the flour, sugar, eggs, and butter in the cake recipe. The government or company needs to mix these ingredients in the right amounts and in the right way to make the cake turn out well.

The exogenous growth model assumes that the ingredients will always be available and that they will be used efficiently. This means that the government or company doesn't have to worry about running out of ingredients or making mistakes in the mixing process.

But just like when you bake a cake, sometimes things don't go according to plan. The economy might have unexpected changes or something might happen to the ingredients. This can make it harder to bake the economy cake.

Overall, the exogenous growth model is like a recipe that governments or companies can use to grow the economy. It assumes that the ingredients will always be available and that they will be used efficiently, but sometimes things can go wrong.