In the Solow model, defining $\bar { s }$ as the saving rate, Y_t as output, and I_t as investment, consumption is given by: A) $C _ { t } = \bar { s } I _ { t }$ B) $C _ { t } = ( 1 - \bar { s } )$ C) $C _ { t } = ( 1 - \bar { s } ) Y _ { t }$ D) $C _ { t } = ( 1 - \bar { s } ) Y _ { t } - I _ { t }$ E) $C _ { z } = \bar { s } Y _ { t }$

Question

Quizplus · Accepted Answer

In the Solow model, consumption $C_t$ is the portion of output $Y_t$ that is not saved. Since the saving rate is $\bar{s}$, the fraction of output consumed is $(1 - \bar{s})Y_t$.

In the Solow Model, Defining sˉ\bar { s }sˉ As the Saving Rate, Yt as Output, and It as the Saving

In the Solow Model, Defining $\bar { s }$ As the Saving Rate, Y_t as Output, and I_t as the Saving