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# THE SOLOW GROWTH MODEL 1. (a) Find the steady-state level of k and y when the economy is described by: n = .08 d = .05 y; = is; V1 (the per-worker

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THE SOLOW GROWTH MODEL
1. (a) Find the steady-state level of k and y when the economy
is described by: n = .08
d = .05
y; = is; V1 (the per-worker production function)
St =.40 (b) When the saving rate falls to .25, what are the new values
for the steady state? Show all calculations. (c) Illustrate both situations above on a graph of the 5919)!!!
model. (d) Show the period of economic growth in the transition from
the old to the new steady state. (e) If your goal was to live in a high consumption per-worker
economy (in steady state), should you select the economy in
part (a) or part (b)? Show and explain.

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