Practice Question 1 (Romer 2.6) The productivity slowdown and saving. Consider a Ramsey-Cass-Koopmans economy that is on its balanced growth path. The dynamic equations for C(t) (consumption per unit of effective labor) and k(t) (capital stock per unit of effective labor) are given by: Q = rtr)p6g=f'ik(r)1peg r3U?) 6 9 kit) = f [k (tn cu) (n+g) k0?) Suppose there is a permanent fall in g. 0 How, if at all, does this affect the k = 0 curve? 9 How, if at all. does this affect the c = 0 curve? 6 What happens to c at the time of the change? 0 Find an expression for the impact of a marginal change in g on the fraction of output that is saved on the balanced growth path. Can one tell whether this expression is positive or negative? 0 For the case where the production function is CobbDouglas. f(k) = k\