Question: This question is from Economic Growth by David N. Weil QUESTION 3 10 marks.~ Consider the following Cobb Douglas production function: Y=KL35. The rate of

This question is from Economic Growth by David N. Weil

QUESTION 3 10 marks.~ Consider the following Cobb Douglas production function: Y=KL35. The rate of depreciation in the economy is 2% and the marginal propensity to save (mps) is 30%. Any output that is not saved is consumed and this is a closed economy. Population growth rate is zero. a. Continue with the same data with the exception that mps is unknown. Solve for the rate of investment which will ensure golden rule of consumption per capita (refer to the golden rule practice problem to be posted on A2L on July 8). Show all the steps covered in the discussion for the practice problem clearly to avoid grade penalty. (5 marks)

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