02. In answering the following questions, use the BelowSwan model of a closed economy without government, described below. Population growth and labour-augmenting technical change are allowed for, and the economy has clearing factor markets (prices adjust to ensure that quantities demanded equal quantities supplied). Output: Y = K\"(EN)1a Labour supply growth: 11 = 0.05 Labour augmenting technical change: 9 Expenditure on GDP: Y = C + 1' Consumption: C = (1 s)Y Savings: 5 : sY = Y C where s is the average saving rate (S/Y) and it is constant Investment: i = 5 Depreciation: dK where the parameter vaiues are: Production function: [I = 0.5 Depreciation rate: d = 0.05 In the above-described production function, E denotes the technical efficiency units per worker (i.e., labour-augmenting technology) and EN is number of effective workers. Unless otherwise indicated, there is no technical change, so that E is constant (assuming E = 1 for simplicity) and, therefore, 9 = 0. {1) Imagine that labour-augmenting technical change is occurring such that the number of effective workers per actual worker is expanding at 2.5% per year (population is still growing at 10% per year). Calculate the saving rate that maximises steady state consumption per effective worker. Is this a Golden Rule steady state? In this steady state, what are the rates of growth of GDP and GDP per capita? (2 marks)|