Assume that education affects only the level of the efficiency of labor. Also assume that two countries are otherwise the same: They have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. But, suppose one country (Country High E), has a highly educated labor force and the other country (Country Low E) has a less educated labor force. Both countries are described by the Solow model and are in their steady states.

Explain how each of the following variables would differ between the countries.

• (a) The rate of growth of total income
• (b) The level of income per worker (provide a diagram to answer this part)
• (c) The real rental price of capital (hint: the real rental price of capital equals the marginal product of capitalMPK.)
• (d) The real wage (hint:The realwage per effective worker is the marginal product of effective labor.)

[For question (b), I need a diagram to explain it. It is better to use Hand-painted. It is also okay if you can use diagrams to explain other questions]