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1) Use the equations below to answer the following questions. Show all calculations.
(a) Y/N = (K/N)1/2 (the per worker production function)
(b) s = .15
(c) δ = .05
Find:
(i)Find the steady-state condition
(ii) Find the value of K*/N in steady state
(iii) Find the value of Y*/N in steady state
(iv) Find the value of C/N (consumption per worker)
(v) Assume s increases to 0.25. Find the new level of C/N at the new steady state.
(iv) Describe the costs and benefits of the increase in the saving rate.
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