1. Country K and Y both have the production function r = For, L} = Est-. (a) Suppose K and L grew by INK] each.~ by how much does Y grow"! Does your answer have anything to do with constant returns to scale? (h) 1c'l-That is the perworker production function, s = fUCJ ='.' {c] Suppose both countries have a depreciation rate of 4%. Country X has a sav ings rate of \"1% and country Y has a savings rate of 20%. The population of both countries grows by 1%. Find the steady state levels of capital per worker and output per worker for both countries. 2. John argues that an increase in the rate of labouraugmenting technological progress causes a decrease in the steady state capital per effective worker. Do you agree? 3. Acmrding to the Solow model; what is the only thing that can explain sustained growth and persistently rising living standards?"