Consider aneconomythat is initially in a steady state equilibrium. Assume that in this equilibrium it has a saving rate of 50 per cent and a depreciation rate of 2 per cent. Further assume

that the population is constant and that the level of output produced can be represented by the following production function:

Y=AKL1

whereA= 1 and= 0.5. Use the Solow-Swan model to determine the level of capital

per worker and output per worker in this economy.(1 mark)