Using this

Now consider the basic Solow model covered in class. Assume that Country A has a production function as following. Y = AW? Where A represents the technology available in the country and K the aggregate capital. Let the national saving rate be equal to 30%, s = 0.3. Also, assume that capital depreciates at a constant rate of 3%, 6 = 0.03. 01.3 Now, let's get back to the situation where A=1. However, say that the depreciation rate has decreased to 0.02 from 0.03. Relative to the previous steady state level of capital and output, what will happen? Also, draw a graph like we did in the lecture note and explain the dynamics. This means that you need to explain why capital and output change according to the Solow model. One further note is that the graph need not be exact (can be handwritten). Show that you understood how the function will look and explain the dynamics related to it