Suppose that the economy’s production function is given by Y=4K^0.7L^0.3. The saving rate is 20%, depreciation rate is 30%, population growth rate is 4%.
a) What is the capital per worker and output per worker in the steady state?
b) Without doing any calculations, explain what would happen to the steady state capital per worker if there is a permanent increase in the fraction of population in the labor force (population growth is unchanged). Use the Solow diagram to illustrate your argumentation.

c) Without doing any calculations, explain what would happen to the steady state capital per worker if there is a destruction of a portion of the nation’s capital stock in war. Use the Solow diagram to illustrate your argumentation.

d) Without doing any calculations, explain what would happen to the steady state capital per worker and output per worke,r if there is a permanent increase in energy prices for an oil-importing economy.

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