Question: Suppose and economy described by the Solow model has the following production function: Y=K^0.4(LE)^0.6
a) For this economy what is f(k) ?
b) Use your answer to part a). To solve for the steady state value of y as a function of exogenous variables s, n, g and d?
c) Two neighboring economies have the above production function, but they have different parameter values. Atlantis has a saving rate of 28%, and a population growth rate of 1% per year. Xanadu has a savings rate of 10% and a population growth rate of 4% per year. In both countries g=-0.02 and d=0.04. Find the steady state value of y for each country.