If an Economy Is in a Steady State with No

question 47

Multiple Choice

If an economy is in a steady state with no population growth or technological change and the marginal product of capital is less than the depreciation rate:

• A) the economy is following the Golden Rule.
• B) steady-state consumption per worker would be higher in a steady state with a lower saving rate.
• C) steady-state consumption per worker would be higher in a steady state with a higher saving rate.
• D) the depreciation rate should be decreased to achieve the Golden Rule level of consumption per worker.

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Definitions:

Yellow Bile

One of the four humors in ancient Greek and Roman medicine, thought to be associated with anger and bad temper.

Testosterone

The male sex hormone.

Social

Pertaining to society or its organization.

Dominant

Exhibiting authority or influence over others; in genetics, it refers to an allele that expresses its phenotype even in the presence of a recessive allele.