Consider the following numerical example using the Solow growth model. Suppose that:

F (K, N) = z K ^2/5 N ^3/5

and d = 0.04, s = 0.3, n = 0.035, and z = 1.75. The unit period is one year.

1. Find the steady state per-capita capital stock (k*), output per capita (y*), and consumption per capita (c*)- [14 pts]

2. Suppose that the economy is at its steady state in year 0. Let z increase from 1 to 1.1 at the end of year 0. Determine the aggregate quantities of the capital stock, consumption, and output for years 1, 2 and 3 (i.e., K, C and Y). Summarize your results using a table. Population N=1000 at time t=0 - [16 pts]