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Unformatted text preview: idea not work in real world that we live in? 4. Suppose you are given the following information on an economy: y = k 1/2 s = 0.25 d = 0.15 k = 9 (a) What are the steady state values of k, y, s, c, and i? Now suppose the s increases from 0.25 to 0.3. What will be the new steady state values of k, y, s, c, and i? (b)What is rate of growth of y in the new steady state? (c) What is the rule for determining the k* for optimal consumption? What is the k* for optimal consumption in this economy?...
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 Spring '10
 Abdullah

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