(10 points) Consider the following modification of a Solow model.The economy's production function is Cobb-Douglas Y= K(EL)l-a.The government taxes incomes proportionally at a rate r and invests fraction S of the tax proceedings into capital (while putting the rest offshore).Households save fraction s out of .their disposable income.Write down an equation for aggregate investment in the economy.Assuming that economy's efficiency of labor grows exponentially at g percent a year, population grows at n percent a year, and the depreciation rate equals , fnd the steady state value of capital per effective worker as a function of s, Sg, T, n, 5, g, and a.

(10 points) Consider the following modification of a Solow model. The economy's production function is Cobb-Douglas Y = K"(EL)1-. The government taxes incomes proportionally at a rate T and invests fraction s, of the tax proceedings into capital (while putting the rest offshore). Households save fraction s out of their disposable income. Write down an equation for aggregate investment in the economy. Assuming that economy's efficiency of labor grows exponentially at g percent a year, population grows at n percent a year, and the depreciation rate equals o, find the steady state value of capital per effective worker as a function of s, Sq, T, n, d, g, and a