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An economy has the per-worker production function y=k0.5where y is output per worker and k is capital-labor ratio. The depreciation rate is 0.1, and the population growth rate is 0.05. Saving is S= 0.3Y where S is the total national saving and Y is total output.
1. What are the steady-state values of the capital-labor ratio, output per worker, and consumption per worker?
2. If population growth rises, for example the population growth rate is 0.2, what are the steady state values of the capital-labor ratio, output per worker, and consumption per worker?
3.Does the change in population growth affect the long run per capita GDP growth?
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