Here is the entire question, no extra information left.

If the labor supply is equal to 500 (Lbar = 500), the initial level of capital is 100 (Ko = 100), the productivity parameter is equal to 1 (Abar = 1), the savings rate is 20% (sbar = 0.2), and the depreciation rate is 10% (dbar= 0.1).

1. Set up the Solow model. Clearly define all the necessary equations and list the endogenous variables (Hint: you should have the same number of equations and endogenous variables)

2. Find the analytical solution to the Solow model. Clearly highlight your final answers. Points will be subtracted if variables are not reported or if wrong variables are reported.

3. Show graphically how would you solve the model:

3.1 Show the graphical solution using the graph explained in slides "Class 15 Solving the Solow Model". Clearly explain what is happening in that graph (remember that the graph explains convergence to the steady state).

3.2 Using the alternative graphical solution explained in class. Show the solution for K* and explain the convergence to the steady state.

3.3 In a new graph, compare the convergence to equilibrium from 3.2 with a new case where the only difference is that Ko = 2,000

. Another way to find the equilibrium capital is to use the law of motion . Another way to find the equilibrium capital is to use the law of motion for capital: AKt+1 = sYt - dkt for capital: AKt+1 = sYt - dkt . This equation can be writen also as: . This equation can be writen also as: Kt+1 = Ke + sYt - dKt