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2. Consider the Solow growth model. Suppose population growth rate is positive. (a) (5 points) Suppose the saving rate in the economy is equal to
2. Consider the Solow growth model. Suppose population growth rate is positive. (a) (5 points) Suppose the saving rate in the economy is equal to the golden rule saving rate. If saving rate rises, would consumption per capita (in the steady state) rise, fall, or be ambiguous? Explain the intuition. (b) (5 points) Suppose the saving rate in the economy is equal to the golden rule saving rate. If saving rate rises, would income per capita (in the steady state) rise, fall, or be ambiguous? Explain the intuition. (c) (5 points) Suppose the saving rate is 0. What would be consumption per capita and income per capita in the steady state? Explain the intuition
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