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 .9, population growth rate 12 and depreciation rate d. l. Derive the golden rule saving rate, 30, so that the maximum of steady-state consumption is achieved. 2. Suppose saving rate is s] in this economy and .91 > 36. At Period T, the saving rate decreases to 33. Before the 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