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b) (2 marks) Derive the equilibrium capital accumulation equation, and for an initial value of the capital stock Ko = 2 in period 0, derive
b) (2 marks) Derive the equilibrium capital accumulation equation, and for an initial value of the capital stock Ko = 2 in period 0, derive the value of Ki and C1. Suppose a government sector is introduced in this Solow-Swan model, with: G = Tt Tt = 0.25Y: A fraction of 0.2Gt is spent on public investment, which supplements the productive capital stock. c) (2 marks) Derive the equilibrium capital accumulation equation for this economy.Quin 2: [E marks] Consider the following model based on Solovawan's model: did a It - (Laid, (1} Capital Dynamics I. = 51, I12} Goods Market Equilibrium 5t = own, :13} Savings Function in: 1.51mi\". (4} Production Function 'ft = C: + 51 {5} Income Function In the above, 'I': stands for output in period t, K: stud: of capital, It investment, 5: savings, and C1 consumption. There Is no population growth and population Is normalized to H = 1. Based on the above information, answer the following questions. a} {1 marks} Consider the EEDDI'I'I'III" at steady state and deriure the equilibrium steadyr state value of capital it"
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