1The Cobb-Douglas production function is given as follows: Y A0 K L1 where Y is output, K is capital stock and L is labor force. Discuss how the model depicts returns to scale? Suppose the policy...

1The Cobb-Douglas production function is given as follows: Y A0 K L1 where Y is output, K is capital stock and L is labor force. Discuss how the model depicts returns to scale? Suppose the policy makers impose policies that increase the level ofcapital stock from 2% to 10%. How does this policy affects the steadystate growth rate? Any alternative policies that you may recommend? How can we investigate the degree of technology in the model? Discuss.2 A) Use algebra to show how capital stock changes at steady state. Thecapital stock is given as follows:K = s Y- dK where K = capital, s = saving rate, Y = income and d = depreciation.B) Use algebra to find the value of output when the economy is at steadystate. To do so, use a simple Cobb-Douglas production function withconstant returns and zero technical progress and zero growth inemployment:Y K L 1 The final solution is:s Y* d (1 ) .L