Exercises - Solow Model 1. For A-1 and alpha= 0.5, redo the calculations of our numerical example. 2. For a savings rate of 20%, a depreciation rate of 10% and the production function from the previous question, find the optimal level of the capital stock by running a numerical simulation in Excel. 3. Evaluate the obvious implication of Solow's model that less developed countries simply need a higher savings rate. 4. For a sample of countries of different types, find: a. the savings rates b. value of capital stock per worker and per capita c. the 5-year growth rate of net capital d. the 5-year growth rate of GDP per worker and per capita. 5. Consider a closed economy with a stable population and no technical progress. In the case where the economy has not reached a stable capital-to-labor ratio (i.e., it is not in a stable state), explain what should happen: a. If the current ratio k=K/N is less than the ratio k* (in steady state equilibrium) b. If the current ratio k=K/N is greater than the ratio k*. c. Illustrate your answers with graphs