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4. Consider a basic Solow economy where Y = 10.671033where the rate of depreciation for capital is 20%, the population grows at 10% and the

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4. Consider a basic Solow economy where Y = 10.671033where the rate of depreciation for capital is 20%, the population grows at 10% and the savings rate is 40%. a. Write the production function in intensive form. [Marks =1] b. Find the steady state values of k*, y* and c*. [Marks =9] c. Is this economy dynamically efficient? Why? [Marks =3] d. Assume that you are an economic policymaker. Will you choose the Golden Rule level of capital? If yes, why? [Marks =4] e. Suppose an agency offered to provide or remove any capital required to move the economy to the golden rule equilibrium. How much would the agency have to provide or remove? [Marks =4] f. Find out the Golden Rule level of savings. [Marks =2]

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