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1) Use the equations below to answer the following questions. Show all calculations. (a) Y/N = (K/N)1/2(the per worker production function) (b) s = .15

1) Use the equations below to answer the following questions. Show all calculations.

(a) Y/N = (K/N)1/2(the per worker production function)

(b) s = .15

(c)= .05

Find:

(i)Find the steady-state condition

(ii) Find the value of K*/N in steady state

(iii) Find the value of Y*/N in steady state

(iv) Find the value of C/N (consumption per worker)

(v) Assume s increases to 0.25. Find the new level of C/N at the new steady state.

(iv) Describe the costs and benefits of the increase in the saving rate.

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