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Suppose that Buffaloville is next door to Ramsville. Assume that both the nations are identical in all aspects except that Buffaloville's s=45%. Now, let us further assume that both the nations start at k=3 A. (i) Excel Sheet 2: a. Using a spreadsheet show how k changes over time in Ramsville and Buffaloville as they approach the steady state. You will need to simulate this for over 200 periods. (5 points) b. Using the same spreadsheet, calculate y and c for both countries. ( 5 points) (ii) Show, graphically, the movements of k,y and c for both countries towards the steady-state. (15 points) (iii) How does c differ in the two countries in period one? ( 5 points) (iv) How many periods does it take before Buffaloville's c is higher than c in Ramsville? (5 points) B. Now, suppose that in period 32, Buffaloville's savings rate drops drastically from 45% to 10%. Discuss (using graphs) the paths of c,y, and k over time. Be sure to discuss the various steady-state values for all variables. Also provide Excel Sheet 3 with the simulation values. ( 25 points) Suppose that Buffaloville is next door to Ramsville. Assume that both the nations are identical in all aspects except that Buffaloville's s=45%. Now, let us further assume that both the nations start at k=3 A. (i) Excel Sheet 2: a. Using a spreadsheet show how k changes over time in Ramsville and Buffaloville as they approach the steady state. You will need to simulate this for over 200 periods. (5 points) b. Using the same spreadsheet, calculate y and c for both countries. ( 5 points) (ii) Show, graphically, the movements of k,y and c for both countries towards the steady-state. (15 points) (iii) How does c differ in the two countries in period one? ( 5 points) (iv) How many periods does it take before Buffaloville's c is higher than c in Ramsville? (5 points) B. Now, suppose that in period 32, Buffaloville's savings rate drops drastically from 45% to 10%. Discuss (using graphs) the paths of c,y, and k over time. Be sure to discuss the various steady-state values for all variables. Also provide Excel Sheet 3 with the simulation values. ( 25 points)

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