Suppose that the production function is y=ka, where y and k denote production per unit of effective labor and capital per unit of effective labor, respectively. Suppose also that the saving rate, the depreciation rate, the growth rate of the population and the rate of technological progress are s, q, n and g, respectively.
a) What is the condition that characterizes the steady-state?
b) What are the growth rates of production per unit of effective labour, of production per worker, and of total production in steady-state?
c) If a=0.3, q=0.05, n=0.02, g=0.03, k/y=3, and the economy is in steady-state, what is the saving rate?
Do what is the marginal product of capital?