The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

Question

Quizplus · Accepted Answer

In the Solow model, the golden rule level of output occurs when the economy reaches a steady state where the rate of capital depreciation equals the rate of investment in capital. At this point, the consumption per person is maximised, which means that the economy is operating at its optimal level. Therefore, the statement is true.

The 'Golden Rule' Level of Output in the Solow Model