\fExercise 7. Golden rule In this chapter it was stated that the golden rule savings rate that maximizes steady state consumption per person as given by (35) is s** = a. Show this. To illustrate, draw a Solow diagram with the curve, sBk, and the ray, (n + 6)k,, as usual, and draw the curve Bk; as well. For any given k,, consumption per worker in period t is the vertical distance between Bk" and sBky. Explain this. The particular steady state capital intensity is where sBky and (n + 8)k, intersect. Hence, in steady state consumption per worker is the vertical distance between Bky and (n + 8)k,. Compute the particular value k** of k, that maximizes this distance. Illustrate the point in your Solow diagram: the slope of Bk/ should equal the slope of (n + 6)k,- Explain this. What is the requirement on s to ensure that the steady state capital intensity, k*, becomes equal to the golden rule capital intensity, * *? Illustrate again in your diagram