Problem 4 Consider an economy in steady state (or on a \"balanced growth path\") without population growth (E is xed). Suppose that a mysterious new disease (COVID-19) sud- denly kills half of the population. We are interested in the effect this likely has on output per worker (Y/ L), both in the short and the long run. In midterm 3 from Fall 2018 we have shown what the Solow and Romer models would predict for the path of output per worker. Now suppose that, after a few periods, the government decides to take action and passes a bill that authorizes spending trillions of dollars to incentivize research (e. g., to find a vaccine or improve the technology to produce respirators quickly): (a) Illustrate in a graph what the Solow model would predict if the government sub- sidies lead to a permanent increase A. Explain. (b) Illustrate in a graph what the Romer model would predict 1f_ the government sub- sidies lead to a permanent increase in the share of workers in research I! (but leaving research productivity 2 unchanged). Explain. (c) Illustrate in a graph what the Romer model would predict if the government sub- sidies lead to a permanent increase in both the share of workers in research 6 and research productivity 2. Explain. (d) What is the fundamental reason for why the two models give different answers to the effects of the government intervention? Explain