Question 3: Imagine an economy with a stable population and a kind of funny production function (and no productivity growth).

Y = 500 + 0.5*K

Saving rate =0.15, Depreciation rate =0.1, At the start of period 1: K =100

What will be the capital stock at the end of period two?

Period	K	Y	s*Y	*K	K for next period
1	100	?	?	?	??
2	Same as ??	?	?	?	This is your answer!

Question 4: In the previous problem, what is the long-run steady-state level of capital?

Question 5: K = $6,000. Y = $2,000. Savings rate s = 0.4. Depreciation rate = 0.2. How much is capital changing?