Computing for capturing the effect of the higher savings rate.
An economy has the per worker production function
yt = 3Ki0.5
Here yt is out per worker and kt is the capital-labour ratio. The depreciation rate is 0.1.
Savings is given by
St = 0.3Yt
Where St is total national savings and Yt is total output.
Discuss the institutes for your findings about the effect of the higher savings rate.