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2. Consider the growth model with no technological progress. Suppose initially the economy is at its steady state. (a) Draw the investment and depreciation curves
2. Consider the growth model with no technological progress. Suppose initially the economy is at its steady state. (a) Draw the investment and depreciation curves on a graph. Label the steady state capital per worker as k}. (b) Suppose there is a sudden drop in the depreciation rate from 6 to 6'. Show the change on the same graph. Label the new steady state capital per worker as kg. Is k; > hi? (c) Sketch the path of capital per worker over time as the economy converges to the new steady state. ((31) Sketch the path of growth rate of output per worker over time as the economy converges to the new steady state
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