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A. Draw a (large enough) Solow model diagram for a model economy. Assume it is in a steady state but has not
reached the golden rule steady state. Label the steady state and explain why you chose this point as the steady
state. Label per person output, investment, consumption, capital stock, and depreciation levels. Finally, write
formulas for each function you plotted.
b) What needs to happen for your economy to reach the golden rule steady state? Label it on your diagram.
c) On your Solow diagram, show the effect of the social distancing measures introduced after a new deadly virus
plagues the economy. Label new per person output, investment, capital stock, and depreciation values as y2,
i2, k2, and δk2, correspondingly. Explain your answer.
d) Would the social distancing measures help the economy to reach the golden rule steady state? Explain your Answer
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