Hello,

I am looking for the answers of this homework:

Consider an economy as represented by the Solow model of economic growth with technological progress.

Assume that the economy is in the balanced growth path (steady state).

a) Explain the effects that an increase in the saving rate has on output per labour (Draw the Solow

diagram as well as the transition dynamics, growth rates, and the diagram illustrating the output per

labour...).

b) Assume that a person who calls himself the great Kim becomes the leader of this country. Kim and his

family decide to destroy half of the capital stock of this country (all other parameters remain constant).

What happens to the level and the growth rate of capital per unit of effective labour over time?

Explain.

c) Kim passes away and an increase in the growth rate of technology takes place at the same time as the

decrease in the depreciation rate (by the same amount). What happens? Explain