Question: Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Assume that the production function is now Yt =

Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Assume that the production function is nowYt=AKt. The rest of the model is unchanged.

a (5 points) Draw the Solow diagram in this case.

b (5 points) Suppose the economy begins with capitalK0, and show how the economy evolves over time in the Solow model.

c (5 points) What happens to the growth rate of per capita GDP over time?

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