Problem 2:

Draw a well-labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous changes.

a.A change in consumer preferences increases the saving rate.

b.A change in weather patterns increases the depreciation rate.

c.Better birth-control methods reduce the rate of population growth.

d.A one-time, permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor.