1. Suppose that the US economy's production can be characterized as:

Y= 10 K^{. 5}L^{. 5}

Suppose further that the population growth rate is 5% and the depreciation is 10%.

1. If the savings rate is 30%, what is the steady state level of capital, output, investment and consumption?
2. If the savings rate increases to 40%, does consumption increase? Show your work.