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.

a. What is the expression for output per effective worker for this production function?

b. If the number of workers is growing annually at the rate gN , annual rate of

technological progress is gA and depreciation rate is given by delta(), what is the required

level of capital per effective worker?

c. Using diagram show and explain the steady state equilibrium values of capital and

output per effective worker.

d. Why by increasing saving rate alone we cannot attain sustained higher growth in the

long run?

e. What is the growth rate of output in steady state? In which rate, are workers getting

richer annually in this model?