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Question 1 [15 points]: Consider the Solow model with population growth and technological progress. The population grows at rate of ry and the technology grows at rate of p. The depreciation rate of capital is E. The aggregate production function is given as Y=10 K* [(1 - u)L]" where Y, K, L, A, # and u refers to aggregate output, aggregate capital stock, aggregate labor, output elasticity with respect to capital, output elasticity with respect to labor, and natural rate of unemployment, respectively. Draw a well-labeled graph that illustrates what happens to steady-state capital per worker, income per worker and consumption per worker over time in response to each of the following exogenous changes. (Hint: Plot per worker variables on y-axis against time on x-axis to show both immediate and gradual responses to the relevant exogenous change) 1. The government starts to pay subsidies to firms that provide training to displaced workers b. An increase in acid rain nearby the production plants C. A new pollution law requires businesses to pay for inspections of their plants by independent pollution- monitoring firms