Where \(\frac{lnX(t_1)}{dt} = 0\)
1.3
a)
When the rate of depreciation falls, the slope of the break-even investment line, \((n + g + \delta)k\), decreases. Actual investment, represented by \(sf(k)\) remains unchanged.
The balanced growth path level of capital goes from \(k^\star_1\) to \(k^\star_2\).