Population growth in the US has, for a very long time been about 1% per year. Take the production function to be y = k0.5, where y and k are output and capital per capita. The depreciation rate is about 10% per year and the savings rate is about 20%. 1. What is the steady state capital per capita rate? 2. From one period to the next, at what rate does total capital (not per capita) grow. 3. If the population growth rate grew to 1.5%, how much would steady state capital per capita change? Then how much is total capital changing at this steady state?

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