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Any advice on how I would go about setting this up? Consider a country that has a population of 2,000 and a current annual GDP

Any advice on how I would go about setting this up?

Consider a country that has a population of 2,000 and a current annual GDP (Y) of $70 million. We also know that:

The country's population, labor (number of people employed), and TFP are fixed and do not ever change.

The country is currently below its steady state level of GDP.

The country's inflation rate is always zero.

The attached graph shows the country's initial GDP function, with its initial levels of GDP and capital stock labeled Y0 and K0.

There is now a new mandatory global foreign assistance effort, with high-income countries (those with per capita GDP greater than or equal to $40,000 per person) required to make monetary contributions to a multilateral organization (outside the country) that then uses the moneys it collects to make assistance payments to very low income countries (per capita GDP less than $5,000 per person).Specifically:

For a country that has a per capita production of goods and services (GDP) of $40,000 or more per year:For that year the country must pay an amount equal to $4,000 times its population size to the multilateral organization in charge of the assistance effort.

A.The graph for the standard Solow model has three curves or lines, for Y, I, and D.Show graphically and explain how (if at all) these would need to be changed, supplemented, or modified, to be able to use the Solow model to analyze this new program of required contributions from high-income countries.

B.You have been asked to determine whether or not the following is possible:

With the program of required contributions in place, this country does not exactly have a steady state.Rather, the country eventually has a situation in which its real GDP oscillates (varies somewhat) around a level of GDP (production of goods and services).

If it is possible, use your graph to explain why.If it is not possible, explain why not, and refer to the graph in your explanation.

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