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Suppose the production is given by Y = 0.5 w E if 3 {AN ) 2f 3. Suppose the depreciation rate is 2%. number of

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Suppose the production is given by Y = 0.5 w E if 3 {AN ) 2f 3. Suppose the depreciation rate is 2%. number of workers grows at 2% per year and rate of technological progress is 3% per year.\" (a) If the saving rate is 14% then nd the steady state values of capital per unit of effect worker and output per unit of effective worker.\" ' (13) Suppose the economy is at steady state with saving rate being equal to 14%. Now suppose the savings rate increases to 15% from 14%. "What will be the capital per unit of effective worker one year aer the change in savings rate?\" ' Show your calculations for both (a) and (b)! ' Using the IS-LM diagram. Show the impact of a contractionary monetary policy for a country that maintains a target interest rate. A130 explain your diagram."

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