Macroeconomics

In the country of Highland, the production function is CobbDouglas and the capital share of GDP is 40%. Suppose Highland is initially in a steady state. The growth in output is 3% per year, the capital depreciation rate is 4% per year, and the capital-output ratio is 31]. Based on the Solow model with population growth and labor-augmenting technological progress, a. 1ll'lulhat muse he the saving rate he in the initial steady state? {2 points] b. 1Ill'llfhat is the marginal product of capital in the initial steady state? {1 point] Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. IWhat will the marginal product of capital he at the Golden Rule steady state? To reach the Golden Rule steady state, will the saving rate be higher or lower than the saving rate in the initial steady state? [2 points}