Problem 5. For the next two questions, consider a nation with the following per worker production function: y = k 0.4 . Its population growth rate is 1.5 %, capital depreciates at 2%, and g=1.5% and the ratio of capital to output per effective worker is 5.2 (annually).

a) Calculate the savings rate, s.

b) Again, consider a nation with the following per worker production function:y = k 0.4 Its population growth rate is 1.5%, capital depreciates at 2%, and g = 1.5% (all annually). If the k-y ratio per worker falls to 3.93 all other things equals. Calculate the new savings rate in the steady state.