1. (33 points) Suppose that an economy has the following production function: Y = F(K, LE) = K1/2(LE)1/2 Assume that the

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1. (33 points) Suppose that an economy has the following
production function:
Y = F(K, LE) = K1/2(LE)1/2
Assume that the rate of depreciation is 6 percent per year ( =
.06), the rate of population
growth is 2 percent per year (n = .02), the rate of labor
efficiency growth is 2 percent per
year (g=.02) and the saving rate is 60 percent (s = 0.6).
1) Calculate the per effective worker production function, the
steady-state levels of capital
per effective worker (k*), output per effective worker (y*),
consumption per effective
worker (c*), and investment per effective worker (i*).(15
points)