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Consider a typical 'Solow' economy with a production function Y=F(K,L), where Y is the economy's output, K is the capital stock and L is labour.

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Consider a typical 'Solow' economy with a production function Y=F(K,L), where Y is the economy's output, K is the capital stock and L is labour. Assume that the economy accumulates capital in the following way: i1+nlkt+1=skt+(1- Blkt. where kt is capital per worker at time t, s is the savings rate, 5 is physical capital depreciation and n is the population (i.e. labour force} growth rate. Conict in a neighbouring state has led to a large number of refugees in this country. Use graphs andfor equations where appropriate. Assume the economy is at a steady state before the refugees arrive. (a) [4 points] What would happen to this economy if the main effect was through the labour market? Explain your answer based on the dynamics of the Solow model. {b} [3 points] How else might the inux of refugees affect this Solow economy? Explain your answer based on the dynamics of the Solow model {c} [3 points] Based on your answers and solely in the context of the Solow model, should a long-term growth minded policy maker award these refugees permanent citizenry? How might this answer change if, instead of the Solow model, you considered endogenous growth models

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