Consider the Solow model of economic growth, with no
technological progress. Assume that δ=0.07 and n=0.03. The
production function is given by Y=K0.5 L0.5.
The savings rate s=0.5.
a) Calculate the steady state levels of capital per worker,
output per worker and consumption per worker.
b) Now, suppose there is an exogenous change in n, which
increases to n=0.055 (while δ, s and the production function remain
identical). What are the new steady state levels of capital per
worker, output...