Consider the Solow model.

Consider two hypothetical countries. Both have the same g,, same Cobb-Douglas production function. At the moment, both have the same level of capital per effective labor k. Country 1, however, has higher savings rate s than Country 2. At the same time, Country 1 has lower population growth rate n than Country 2. Assume both are currently below their steady states.

a.Draw the amount of inflow (sy) and the amount of outflow (n+g+)k vs. k for both countries on the same graph.Indicate the steady states of both countries and the current position of both countries.

b.Draw the rate of inflow () and rate of outflow () vs. k for both countries on the same graph. Indicate the steady states of both countries and the current position of both countries.

c.Which graph (in (a) or in (b)) will help you measurethe current value offor each country? Indicate the current values offor both countries on that graph.Which country has a higher current (transitional)?Which country has a higher current (transitional) growth rateof Y/L (i.e.)? Explain. Which country has a higher steady state growth rate of Y/L? Explain.