1 The Solow Model [20 Points] Consider a Solow economy which is identical to the one we studied in Lecture 2. The production function is Cobb-Douglas, Y : A - K" - N 1'". The saving rate is 3, population growth rate 11 and depreciation rate d. l. Derive the golden rule saving rate, so, so that the maximum of steady-state consumption is achieved. 2. Suppose saving rate is 31 in this economy and 31 > 83. At Period T, the saving rate decreases to 35-. Before tlle shock, the economy is at the steady state. Plot the trajectory of consumption per capita and capital-labor ratio over time, when the economy moves from the previous steady state to the new one. Explain your