-25 points- Consider the Solow growth model in which population evolves according to: N = (1 + n)N where N is the population (labor force) in the current period, N is the population (labor force) in the future period, and n is the population growth rate. The production technology is given by Y = zKN1 where Y is the output of the consumption good, z is the total factor productivity, K is the current period capital stock, N is the labour input, and 0 < < 1 is a parameter. Consumers save a constant fraction, s, of their disposable income, where 0 < s < 1.

(a) Suppose that the economic is hit by a severe drought. Assume that the drought is temporary. Using the Solow growth model, assess the impact of the drought both in the short run and long run.

(b) Suppose that the drought is now permanent. Using the Solow growth model, assess the impact of the drought. Contrast the model's prediction with that in (3a).