Suppose that the economy under study has the following characteristics:
s = 0.30 n = 0.02 g = 0.10 d = 0.03
K = 1600 Y = 800 N = 100 A = 2
Y = F(K, N, A) = AF(K, N) = A(K^(1/2))(N^(1/2))
What savings rate would be needed in order for this economy to achieve the golden rule steady state? (Hint: First find the level of k=K/N for which the golden rule is satisfied, then obtain y=Y/N and use the balanced growth condition to determine the savings rate, s).