If an Economy Is in a Steady State with No

question 33

Multiple Choice

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.

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Definitions:

Low Cost Countries

Countries with lower labor and production costs, making them attractive locations for manufacturing and sourcing components.

Safety Inventory

Extra stock kept on hand to guard against uncertainty in demand or supply and prevent stockouts.

Uncertain Demand

Refers to situations where future customer demand for a product or service is unclear or difficult to predict.

Losing Sales

The phenomenon of experiencing a decrease in the number of sales transactions or revenue, often as a result of competition, market shifts, or other external factors.