10. At the current steady state capital-labor ratio, assume that the steady state level of per capita consumption, (C/N)*, is less than the golden rule level of steady state per capita consumption. Given this information, we can be certain that A. an increase in the saving rate will cause an increase in (C/N)*. B. a reduction in the capital-labor ratio will cause a reduction in (C/N)*. C. the capital labor ratio will tend to increase over time. D. a reduction in the saving rate may have an ambiguous effect on (C/N)*.

10. At the current steady state capital-labor ratio, assume that the steady state level of per capita consumption, (C/N), is less than the golden rule level of steady state per capita consumption. Given this information, we can be certain that A. an increase in the saving rate will cause an increase in (C/N). B. a reduction in the capital-labor ratio will cause a reduction in (C/N). C. the capital labor ratio will tend to increase over time. D. a reduction in the saving rate may have an ambiguous effect on (C/N).

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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