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2. Consider the following Solow diagram, indicating two separate savings rates, 3 and s': (n+d)k 9 yr y= ftk) ts: 92* 33' m (a) Suppose

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2. Consider the following Solow diagram, indicating two separate savings rates, 3 and s': (n+d)k 9 yr y= ftk) ts: 92* 33' m (a) Suppose the savings rate is .9. At the steady state, what is capital per worker? What is output per worker? (h) Suppose the savings rate increases to 3'. At the steady state with the savings rate. what is capital per \"worker? What is output per worker? (c) When transitioning from the old steady state to the new steady state, does total output grow slower or faster than it did at the old steady state? (d) When the economy reaches the new steady state, does total out- put grow slower or faster than it did at the old steady state? (e) Ifthe f (k) function exhibited increasing returns to capital, rather than decreasing returns, would you expect the economy to end up in the steady state in the long run? Why or why not

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