1. (30 points} Consider the Solow model with technological growth. Assume the production func- tion is ya = lUkEA, where output per e'iciency unit of work ya = % is a function of capital per eiciency unit of work: Ice 2 %. The saving rate in this economy is 30% of output, the yearly population growth rate is 1%, the yearly depreciation rate is 6%, and the growth rate of technology is 2%. (a) (12.5 points) Draw a diagram of the model, with leg, on the x-axis and ya, on the y-axis. Your diagram should have three curves; identify them. Identify the steady-state capital per efciency unit of work, 1:35, and output per unit worker, y'b, in your diagram and calculate them. Suppose now that the depreciation rate increases to 8%. (h) (12.5 points) Calculate the new steady'state, kfs' and yfs' , and show the change in your diagram by redoing it. (c) (5 points] At what rate do aggregate output. Y, output. per worker y, and output per efciency unit of labor y, grow in the new steady-state? How does that compare to the original steady-state