If the marginal product of capital net depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labour-augmenting technical progress equals 2 percent, to reach the Golden Rule level of the capital stock, the _____ rate in this economy must be _____.

Question

Quizplus · Accepted Answer

To reach the Golden Rule level of capital stock, the saving rate must be increased to ensure that the marginal product of capital equals the sum of the population growth rate, the rate of labor-augmenting technical progress, and the depreciation rate.

If the Marginal Product of Capital Net Depreciation Equals 8