How could you expand the model to eliminate the problem


Problem

If, in the context of a standard production function, Y F ( K , N ), where K represents physical capital and N represents raw labor, we were to interpret the Solow residual (AA ) as "technological progress," we would be in error. What, besides technological progress, would this residual catch? How could you expand the model to eliminate this problem?

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Macroeconomics: How could you expand the model to eliminate the problem
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