Question

Assume that an economy is initially in a steady-state, that population growth and the rate of technological change are both zero, but that capital depreciates at rated. Use the appropriate graphs to illustrate and explain how an increase in the saving rate would affect all of the following:
a. the steady-state capital stock per worker.
b. the steady-state level of output per worker.
c. the steady-state rate of growth of output per worker.
d. the Golden Rule capital stock per worker.
e. the rate of growth of output per worker during the transition from the initial steady-state to the final steady state.