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Suppose that the production function of an economy is Cobb-Douglas: Yt : A K, L}' and where the population growth rate is 2% and the

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Suppose that the production function of an economy is Cobb-Douglas: Yt : A K,\" L}'\" and where the population growth rate is 2% and the rate of depreciation of physical capital (5) is 6%, the share of capital income in total income is 0.3 and the saving rate (5} is 20%. a) Determine what is the steady state per capita capital stock, steady state per capita output and steady state per ca pita consumption. b) Determine what should be the per capita capital stock of gold in this economy. What is the gold saving rate and the per capita consumption of gold? (Refer to Solow Growth Model}. c) If the population growth rate increases to 5%, what are the effects on the values calculated in questions a) and b}? d) Suppose that the savings rate (5) of the economy increases to 30%, what effects does it have on the values calculated in questions a) and b)? e) Suppose that the share of capital income in total income increases to 0.4, what is the effect on the values calculated in questions a} and b)? f) What is the relationship between the share of capital income in total income and the gold savings rate

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