Question 1. Suppose that the economy's production function is given byY= F(K, AN)where Y is output, K is capital stock; A is state of technology; N is number of workers, and AN is number of effective workers. Let the number of workers is growing annually at the rategN, annual rate of technological progress isgA and depreciation rate is given by

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1. What is the steady-state condition for this economy? What are the growth rates of output, capital, output per worker? What is happening to output per effective worker in the steady-state?
2. Why is the impact of increasing saving rate in this model? Can it attain sustained higher growth per worker in the long run? Why and why not? What is the long run solution to increase output per worker?