Use the following production function and parameters in the Solow growth model to answer questions $1-2$ for a hypothetical economy:

$\backslash [$ Y$=4$K$^\{0\mathrm{.}14\}($AL$)^\{0\mathrm{.}14\}\backslash ]$

; population growth rate is $2\mathrm{.}1\backslash \%$; saving rate is $20\backslash \%$; depreciation rate is $7\backslash \%,$ and technological progress is $1\mathrm{.}1\backslash \%.$

$1.$ There is an over$-$accumulation of capital in the economy so the saving rate should be reduced.

$2.$ The saving rate needed to reach the golden rule level of capital per effective labour is $0\mathrm{.}25.$

Use the following parameters in the IS$-$LM model to answer questions $3-5$: $\backslash (\backslash$lambda$\_\{1\}=8/3,\backslash$lambda$\_\{2\}=8/9,\backslash$beta$\_\{1\}=1/50,\backslash$beta$\_\{2\}=1/40\backslash ),$ interest elasticity of investment$=50,$ marginal propensity to consume $\backslash (-3/4\backslash ),$ marginal tax rate $\backslash (=1/5\backslash )$ and $\backslash ($ P$=1\mathrm{.}1\backslash )$ :

$3.$ Equilibrium values of income and interest rates are $1856$ and $7\mathrm{.}65$ units respectively if autonomous aggregate demand and nominal money supply are $630$ and $198$ units respectively.

$4.$ Fiscal policy is twice as effective as monetary policy.

$5.$ If government increases its spending by $160$ units, investment will be crowded out by $200$ units