Suppose that the economy initially sits in a steady state. At period = 100, your shock happens. Plot out diagrams showing how consumption, investment, and output per efficiency unit of labour will react over time to the shock. Describe how the shock plays out in the diagram in a few sentences. Discuss the responses of the variables immediate after the shock and their behaviour in the long run. Will your variables return to the previous steady state or approach a new steady state in the long run? Justify the answer to this question by presenting the relevant derivative.

Plot out diagrams showing how the actual economy in the Solow model, i.e. consumption, investment and output per labour unit (NOT per efficiency unit of labour) will react in a dynamic sense (i.e. over time) to the shock. Plot, in a separate diagram, how the real wage reacts to the shock. Make sure that the reaction of the variables is properly visible in the diagram (you might have to select a shorter time horizon in the diagram to show the reaction of the variables to the shock). Describe how the shock plays out in the diagram in a few sentences. Discuss the responses of the variables immediate after the shock and their behaviour in the long run.