Question 1:Fact I:Consider the following setup that follows thestandard Solow model in Country A.There are N consumers,each
endowed with one unit of available time.Consumers do not valueleisure and they divide output between consumption andsavings
according to the following rule:a fraction s of output is saved,andthe rest is consumed.There is a representative firm that has aCobb-
Douglas production technology of the form Y=zF(K,N),where K denotescapital,N denotes Labour,z is(Total Factor Productivity
（TFP).Initially country A had 100 units of Capital,144 units oflabour and population growth rate was 0.01.Suppose you aregiven
the fact that in this economy depreciation d is 0.09 and at steadystate,the output per-capita could be expressed asy*=(k*)05.Now,
consider the unfortunate situation where a disease took severallives,reducing the number of labour force equal to 81 units.
1.1 Describe and explain changes/effect of this disease on countryA's per-capita output,and per capita capital in the steady
state,comparing these with the initial steady state that wasprevailing before the disaster.(Note:you are supposed to
describe and explain changes in detail,following Solow Model.Thenumbers are provided to give you more details
about the economy,but you are not required to provide mathematicalderivations/numbers for this question).
1.2 If you were illustrating the old and new steady state in adiagram,with per-capita capital in x-axis,describe how your
graph would change before and after the disease.Would you expectthe growth rate of output per worker in country
A smaller or greater than it was before the disease?