Question: Part A In this question, we consider the eect of saving rate change in the Solow model. The description of the model setup is as


Part A In this question, we consider the eect of saving rate change in the Solow model. The description of the model setup is as follows. The production function is given by r; = AKENE where Y is total output, A is the level of technology, K is total capital, and N is population. Assume the level of technology A is 2, population growth rate 11 is 0.1, and depreciation rate d is 0.2. Notice that the key equation of the Solow model is given by (1 + n)(kt+1 kt) = 3% (n + d)kt where k is capital per capita, y is output per capita, and s is a saving rate (0 g s g 1). We assume the saving rate is s = 0.6 and the economy is at the steady state. (1) (5 points) Compute the steady-state level of per capita capital, output, consumption and investment, denoted as 16*, y\
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