9. LO 5 Consider a numerical example in the Solow growth model. Suppose that zF(K, N) = K0.4N0.6, where d = 0.2, s = 0.4, n = 0.02, and z = 1.

(a) Write the per worker production function.

(b) Calculate the capital per worker, income per capita, and consumption per capita in the steady state.

(c) Now, suppose that the economy is initially in the steady state that you calculated in part (b)
and s increases to 0.6.
i. What will be the capital per worker, income per capita, and consumption per capita in the new steady state?
ii. Use Excel to determine the path of the change in capital per worker, income per capita, and consumption per capita for each year until the new steady state is reached.
iii. How many years of positive economic growth will the economy enjoy if s increases from 0.4 to 0.6?
iv. Referring to your answer to part ii., explain how capital per worker reaches the new steady state.