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(30 points) Assume an economy in which the long term dynamics is described by the Solow growth model without population growth and technological progress. The

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(30 points) Assume an economy in which the long term dynamics is described by the Solow growth model without population growth and technological progress. The following equations and parameters characterize the economy: Output per worker: y = k"'6 Saving rate: s=0.4 Depreciation rate: 5:0.1 Ak=sf(k)6k If investment is just enough to cover depreciation [sf(k) = 5k], then capital per worker will remain constant: Ak = 0. This occurs at one value of k, denoted k", called the steady-state capital stock

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