Exogenous Growth Models (Intermediate Macroeconomics)

Exogenous Growth Models [40 pts] Consider the following numerical example using the Solow growth model. Suppose that F(K, N) = zK3/5N2/5 where the capital depreciation rate is d = 0.1, the savings rate is s = 0.25, the population growth rate is n : 0.075, and the productivity is z : 1.5. 1. Find the steady state per-capita capital stock 00*), output per capita (31*), and consumption per capita (c*). [15 pts] 2. Assume the economy is in the steady state of Question 1 and the government wants to implement a policy that will increase the long run per capita capital by 10%. Determine the percentage change in the population growth n that is required to achieve this goal. [08 pts] 3. Assume the economy is in the steady state of Question 1 and the government wants to implement a policy that will increase the long run per capita output by 10%. Determine the percentage change in the productivity 2 that is required to achieve this goal. [07 pts] 4. Assume the economy is in the steady state of Question 1 and the govermnent wants to implement a policy that will increase the long run per capita consumption by 10%. Determine the percentage change in the savings rate 5 that is required to achieve this goal and get a higher level of per capita capital for the next generation. [10 pts]