Consider the Solow model of economic growth, with no technological progress. Assume that =0.07 and n=0.03. The production function is given by Y=K^0.5L^0.5. The savings rate s=0.5.

a) Calculate the steady state levels of capital per worker, output per worker and consumption per worker.

b) Now, suppose there is an exogenous change in n, which increases to n=0.055 (while , s and the production function remain identical). What are the new steady state levels of capital per worker, output per worker and consumption per worker?

c) Use the Solow diagram to depict the effects of the change in non steady-state capital per worker

d) After the change in n, is it possible for the economy to go back to the level of steady-state consumption per worker that it had before the change in n by changing its savings rate?