The golden rule level of capital refers to:
A) the level of capital that maximises output per worker.
B) the level of capital that maximises consumption per worker in the steady state.
C) the level of capital that maximises the level of output in the steady state.
D) the level of capital that maximises consumption per worker.
E) the level of capital that maximises the standard of living.

Question

Quizplus · Accepted Answer

The golden rule level of capital refers to the level of capital that maximizes consumption per worker in the steady state. This occurs when the marginal product of capital equals the rate of depreciation plus the rate of population growth. At this level of capital, the economy achieves its optimal level of consumption and investment, leading to a sustainable level of economic growth and well-being.

The Golden Rule Level of Capital Refers To