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6. (20 points) Assume that in Country X, output is produced with labour and physical capital. The production function in per-worker terms is y =
6. (20 points) Assume that in Country X, output is produced with labour and physical capital. The production function in per-worker terms is y = k\" 2. The depreciation rate is 2%. The investment rate is determined as follows: y=0.20ify510 y=0.40ify>10 Draw a well-labelled diagram showing the steady-state(s) of this model. Calculate the values of any steady-state levels of k and y. Also, indicate on the diagram and describe briey, in words, how the levels of k and y behave outside the steady-state(s)
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