Suppose that the economy reached its steady state again. Describe and explain the evolution of k, y, c, i, r and w after an unexpected and permanent increase in the growth rate of labour augmenting productivity z.

Suppose that the economy is well described by the augmented Solow model. Assume F(Kt, Z4N+) = AK (Z4N+)?-. Also, assume that Z4 and Ny grow at a rate equal to z and n, respectively. The transitional dynamics equation, in terms of efficiency units (kt = .), is . 1 ke+1 (1 + 2)(1+ n) J[Syk + (1 - 0)]. Suppose that the economy is well described by the augmented Solow model. Assume F(Kt, Z4N+) = AK (Z4N+)?-. Also, assume that Z4 and Ny grow at a rate equal to z and n, respectively. The transitional dynamics equation, in terms of efficiency units (kt = .), is . 1 ke+1 (1 + 2)(1+ n) J[Syk + (1 - 0)]