The Ohio State University blingmill Park Problem 2 (10 points). Suppose that Lalaland is a closed economy on balanced growth path, whose output in each year t is given as YA = KP ( L . E . ) 1-a, where It is the capital stock, It is the size of the labor force, and Et is the efficiency of labor. Then LtEt is the size of the effective labor force. The constant o is between 0 and 1. Suppose that the people in this economy saves a constant fraction s of their income every year. The constant s is smaller than o. Suppose also that a constant fraction o of existing capital stock gets depreciated away every year. Moreover, the labor force and the efficiency of labor grows at a constant rate n and g every year. (a) What is the growth rate of output per effective worker? What is the growth rate of output per worker? What is the growth rate of total output? (b) What is the effect of a one-time increase in the saving rate s to o on the output, consumption, and investment in this economy over time? (c) What is the effect of a one-time increase in the growth rate of the labor efficiency g on the output, consumption, and investment in this economy over time