Consider a closed economy in which the population grows at the rate of 1% per year. The per-worker production function is yt = 2.2kt^0.5, where y is output per worker and k is capital per worker. The depreciation rate of capital is 10% per year a- Households initially consume 80% of income and save the remaining 20% of income. There is no government spending. What are the steady-state values of capital per worker, output per worker, consumption per worker, and investment per worker? b-Suppose saving rate decreases to 10% permanently. What are the steady-state values of capital per worker, output per worker, consumption per worker, and investment per worker?

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