Review Chapter 7 in GLS for answering this question. Hint: For parts (d) and (e), you could show your work on the assumption

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rate in country 1 is s, = 0.2. In an Excel spreadsheet, compute different values of the relative steady state outputs (i.e. ranging from 1 to 5, with a gap of 0.1 between entries (i.e. you should create a column with 1, 1.01, 1.02, 1.03, and so on). For each value of #, solve for the value of so necessary to be consistent with this. Produce a graph of this value of $2 against the values of . Comment on whether it is plausible that differences in saving rates could account for large differences in relative GDPs. e) Redo this exercise, but instead assume that o = 2/3. Compare the figures to one another. Comment on how a higher value of a does or does not increase the plausibility that differences in saving rates can account for large differences in output per capita.Excel Problem] Suppose that you have two countries, call them 1 and 2. Each is governed by the Solow model with a Cobb-Douglas production function, but each each country has potentially different values of s and A. Assume that the value of A for each country is fixed across time. The central equation of the model is: kit+1 = s;Ajka + (1 -8)kit, i = 1,2. Output in each country is given by: yi,t = Ajka. (a) Solve for the steady state capital stock per worker for generic country i (i is an index equal to either 1 or 2). (b) Use this to solve for the steady state level of output per worker in country i. (c) Use your answers from previous parts to write an expression for the ratio of steady state output in country 1 to country 2 as a function of the respective saving rates, productivity levels, and common parameters of the model. (d) Suppose that each country has the same value of A, so A1 = A2. Suppose that o = 1/3, and 6 = 0.1. Suppose that the saving