Calculate the saving rate, and the rate of economic growth for the first year (i.e. after the first round of investment). Explain what happens to the capital coefficient, saving rate, and rate of economic growth as the level of investment changes and the economy grows.

Productivity of Capital = AY / AK = 1/ v = 1 / 3 S 1 = 102 1 = 86 1 = 74 13 - - - ----7-- I = 63 1 = 54 - Y Y1 Y2 Y3 YA Y5 =150 =168 =189 =214 =242