Exercise 2 How the economy approaches the steady state? Consider an economy with the following characteristics: Y = Kly'ENlJI'rZ S = {LSD d = [1.10 K E = 4 (economy's level of capital stock per worker in year 1) 1. Compute the change in capital stock per worker, 11$) in years 1, 2, 3, 4 and 5. Summarize your answers in a table. 2. Calculate the steadystate capital stock per worker K? and steadystate output per worker Y? 3. Based on the table, what are your insights on the results? For each insight, identify the theory inyolyed. Exercise 3 - Effects on output of an increase in the saving rate Consider the economy as described in Exercise 2. Suppose the saying rate increased from 30% to 4CI%. 1. Calculate the steadystate capital stock per worker K? and steadystate output per worker Y? 2. Compared to your answer in Exercise 2, analyze the effects of an increase in the saying rate on the steadystate capital stock per worker and steadystate output per worker