If an economy is in a steady state with no population growth or technological change and the capital stock is below the Golden Rule:
A) a policymaker should definitely take all possible steps to increase the saving rate.
B) if the saving rate is increased, output and consumption per capita will both rise, both in the short and long runs.
C) if the saving rate is increased, output per capita will at first decline and then rise above its initial level, and consumption per capita will rise both in the short and long runs.
D) if the saving rate is increased, output per capita will rise and consumption per capita will first decline and then rise above its initial level.

Question

Quizplus · Accepted Answer

The Answer of If an economy is in a steady state with no population growth or technological change and the capital stock is below the Golden Rule:
A) a policymaker should definitely take all possible steps to increase the saving rate.
B) if the saving rate is increased, output and consumption per capita will both rise, both in the short and long runs.
C) if the saving rate is increased, output per capita will at first decline and then rise above its initial level, and consumption per capita will rise both in the short and long runs.
D) if the saving rate is increased, output per capita will rise and consumption per capita will first decline and then rise above its initial level.

If an Economy Is in a Steady State with No