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Q. Reflect on the Solow Growth Model by means of technology given by Y = zF(K, N) = K^(1/2)N^(1/2), its savings rate is 0.2 moreover its depreciation rate is 0.1. Together the population growth as well as the technological growth is 0. Notify that the lower caseletters denote per capita variables e.g. y=Y/N).
(a) Elucidate the steady state values of c, y, k and i?
(b) Elucidate the values of y and k only if economy operates at "Golden Rule" level of capital accumulation?
(c) Elucidate the saving rate which you've to impose also the level of c? Envision that you want to drive this country in the "Golden Rule" levels of k and y.
(d) Elucidate what would be the immediate and long run effects on c, k, and y? Explain by drawing the path of these variables. Consider that you impose the new saving rate.
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