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b. Imagine that the economy described in part a of this problem begins time (to) with 1 unit of capital per effective worker. Assume that

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b. Imagine that the economy described in part a of this problem begins time (to) with 1 unit of capital per effective worker. Assume that investment demand rises at the same rate as real GDP. Further, assume that by time t1 this economy has achieved the steady state level of capital. On the left-hand side of the plots below, diagram the movement of the requested variables between time to and time t1. (12) Time Y Time X L Time Y Time t0 t1 c. At time t1, this economy raises the savings level to s' where s'>10%. On the plot above, diagram the of the variables as the economy evolves through time. (12)

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