Answer Happy

[Solow Model] A closed economy has the following Cobb-Douglas
production function: Y equals K to the power of 1 divided by 3 end
exponent L to the power of 2 divided by 3 end exponent, where Y
denotes output, K denotes capital, and L denotes labor. Capital is
measured in machines and labor is measured in workers. There is
neither population growth, nor technological progress. The annual
depreciation rate is 1.2%. The saving rate is 30%. There are 27
machines per worker at the beginning of the year. (a) How much is
consumption per worker during the year? (b) How much is consumption
per worker during the next year? (c) How much is consumption per
worker in the steady state? (d) Now assume that the economy is
already in its steady state. (i) By how many percentage points
should the government change the saving rate so that the economy
may converge to the golden rule steady state (use a "+" for an
increase and a "-" for a decrease)? (ii) How would the current
generation feel about such a change? (iii) How much would be
consumption per worker in the golden rule steady state?