The Golden Rule Level of the Steady-State Capital Stock

question 11

Multiple Choice

The Golden Rule level of the steady-state capital stock:

• A)will be reached automatically if the saving rate remains constant over a long period of time.
• B)will be reached automatically if each person saves enough to provide for his or her
• C)retirement. implies a choice of a particular saving rate.
• D)should be avoided by an enlightened government.

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Definitions:

Disposable Income

Households’ financial capacity for savings and expenditure after income tax obligations are met.

Consumption Spending

The total value of all goods and services consumed by households and individuals.

Household

A single person or a group of people living together in a single living accommodation, sharing meals or living space, and may operate as a single economic unit.

Project Financing

Arrangements used to finance mainly large capital projects such as energy explorations, oil tankers, refineries, utility power plants, and so on. Usually, one or more firms (sponsors) will provide the equity capital required by the project, while the rest of the project’s capital is supplied by lenders and lessors. The most important aspect of project financing is that the lenders and lessors do not have recourse against the sponsors; they must be repaid from the project’s cash flows and the equity cushion provided by the sponsors.