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1 The Solow Model (8 marks) An economy has the per-worker production function 1 = Ak where y is output per worker and & is capital per worker; A = 8 and o = 1/3. Capital accumulation follows: k = sy - (n + 8)k The saving rate s is 0.15, the depreciation rate o is 0.04, and the population growth rate n is 0.01.e. Suppose the economy is not in the steady state. Derive the growth rate of capital per worker (=) along the transition path as a function of A, k, a, s, n and 5. Under what condition is = positive? What is the relationship between = and k? f. (Challenging) Write down steady state consumption per worker, c*, as a function of A, k*, a, n, and 6. Can you find a k* that maximizes c*? Express it in terms of A, or, n. and 6. This is called the golden rule capital per worker. Can we save too much