Question: Consider the Solow Growth Model with the production function: F(K, N) = (K + 2K^(1/2)N^(1/2) + N) Y = zF(K, N). Assume 5% of the

Consider the Solow Growth Model with the production function: F(K, N) = (K + 2K^(1/2)N^(1/2) + N)

Y = zF(K, N).

Assume 5% of the capital is lost each period due to depreciation and the population grows by 5% each period.

The consumer in this economy saves 50% of his income. The total factor productivity is given by z = 0.05.

1. Compute the steady state k in this economy

2. Compute the Golden Rule k *, s *, and c *

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