If an economy is in a steady state with no population growth or technological change and the capital stock is above the Golden Rule level and the saving rate falls:
A) output, consumption, investment, and depreciation will all decrease.
B) output and investment will decrease, and consumption and depreciation will increase.
C) output and investment will decrease, and consumption and depreciation will increase and then decrease but finally approach levels above their initial state.
D) output, investment, and depreciation will decrease, and consumption will increase and then decrease but finally approach a level above its initial state.
Correct Answer:
Verified
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