1 Consider two countries, A and B, which are described by the Solow model. In both countries production function (in per capita cris) is Q = Lk05. There is also to technological change. In A, the saving rate (s) is (),1, the rate of depreciation (8) is 0,02 and the population growth rate (n) is 0,01, In B. the saving rate is 0.3, the rate of depreciation (8) is 0.01 and the population growth rate is 0.02. (a) Derive the fundamental equation of the Solow growth model for both countries. (b) Find equilibrium level of capital per worker k for both countries graphically with the k on the vertical axis and k on the horizontal axis. 2. Let demand and supply he Qd = a Pa >0, (1) ldp Q = -y + SP + ,1.8 >O (2) (a) Assuming that the rate of change of price over time is directly proportional to the excess demand write the differential equation of model. (b) What is the intertemporal equilibrium price? What is the market-clearing equilibrium price? 1 Consider two countries, A and B, which are described by the Solow model. In both countries production function (in per capita cris) is Q = Lk05. There is also to technological change. In A, the saving rate (s) is (),1, the rate of depreciation (8) is 0,02 and the population growth rate (n) is 0,01, In B. the saving rate is 0.3, the rate of depreciation (8) is 0.01 and the population growth rate is 0.02. (a) Derive the fundamental equation of the Solow growth model for both countries. (b) Find equilibrium level of capital per worker k for both countries graphically with the k on the vertical axis and k on the horizontal axis. 2. Let demand and supply he Qd = a Pa >0, (1) ldp Q = -y + SP + ,1.8 >O (2) (a) Assuming that the rate of change of price over time is directly proportional to the excess demand write the differential equation of model. (b) What is the intertemporal equilibrium price? What is the market-clearing equilibrium price