Consider an economy with population growth at rate n = :03, technological growth at rate g = :02, depreciation at rate = :05, and a
savings rate of s = :30. The economy is at steady state.
(a) What is the rate of growth of aggregate income Y in this economy? Show your work.
(b) What is the rate of growth of the aggregate capital stock K in this economy? Show your work.
(c) What is the rate of growth of the capital-labor ratio K/L in this economy? Show your work.
(d) What is the rate of growth of per-capita income Y/L in this economy? Show your work.
(e) What is the capital-output ratio K/Y in this economy? Show your work.
(f) List three policies that can improve the economy's steady state income per capita (y).