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Consider the following numerical example using the Solow growth model. Suppose that F (K, N) = sls'd'qld2 Furthermore, assume that 5% of the capital is
Consider the following numerical example using the Solow growth model. Suppose that F (K, N) = sls'd'qld\"2 Furthermore, assume that 5% of the capital is lost each period due to depreciation, the population grows by 1% each period, the consumer in this economy saves 20% of his income and the total factor productivity is z = 2. The unit period is one year. 1. Find the steady state per-capita quantity of capital (k'), production (y') and consumption (c'). [5 pts] 2. Find the steady state quantity of capital per worker that maximize consumption per worker in this model. [4 pts] 3. Derive the golden rule steady state per-capita consumption 0:\"), production (y**) and saving (s**). [6 pts]
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