Consider an economy with technological progress (g > 0) but with no ongoing population growth (n = 0) that is initially on its steady-state balanced growth path. Now suppose that immigration increases the population all at once from N0 to N1. The immigrants bring no capital with them and do not increase either the level or rate of growth of technological progress.

a. At the moment of the population increases, what happens to the level of k and the level of y?

b. At the moment of the increase, what happens to Y?

c. Once the economy has again reached a steady-state growth path, how do the levels of k and y compare with those before the immigration occurred?