This is a Solow model question. There is no government and no foreign sector. In equilibrium savings (S) must equal (I) investment. Agents save a constant fraction of output according to S=sY Output is given by a Cobb-Douglas production function Y = K \"(QN )1_\". Q is labor-augmenting technological progress and grows such that Q' = (1 + q)Q Growth of capital is described by K ' = K (1 d) + I Population grows according to N ' = (1 + n)N Define little letters as big ones divided by QN, such that little letters refer to values per efciency unit of labor. b) Derive the equation for k' as a function of k. Write the equation which determines the value of k in steady state, placing the terms which are linear in k on one side of the equation and remaining terms on the other. Explain the equation intuitively. Draw a graph illustrating the equilibrium condition and label the initial value for steady-state k as k1. On the graph, label the function form of the savings curve and investment curve. Now let n increase permanently. Illustrate the effect on the steady-state value for k. Label the new steady state k as [(2. (15 points)