Use the Solow growth model to analyze what happens if population growth is permanently declining. Assume that the economy in its initial position is in a position of balanced growth.

a) Show which curve (s) is shifted and what happens over time with the capital stock per unit of labor efficiency ( / AN).

b) Suppose that the growth rate in the technology factor is 2% and that the population growth is 2%. How quickly does GDP and GDP per employee grow in balanced growth? If population growth falls to 1%, what will be the growth rate in GDP and GDP per employed person in the new balanced growth path?