If the economy has more capital than in the Golden Rule steady state, reducing the saving...
If the economy has more capital than in the Golden Rule steady state, reducing the saving rate will:
A.increase steady-state income but decrease steady-state consumption.
B.decrease both steady-state income and steady-state consumption.
C.increase both steady-state income and steady-state consumption.
D.decrease steady-state income but increase steady-state consumption.
Homework Answers
Answer
option D
D.decrease steady-state income but increase steady-state consumption.
the decreasing in the saving rate decreases income but it increases consumption as the capital is above golden rule.
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If the economy has more capital than in the Golden Rule steady
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