If an Economy Is in a Steady State with a Saving

question 27

Multiple Choice

If an economy is in a steady state with a saving rate below the Golden Rule level, efforts to increase the saving rate result in:

• A) both higher per-capita output and higher per-capita depreciation, but the increase in per-capita output would be greater.
• B) both higher per-capita output and higher per-capita depreciation, but the increase in per-capita depreciation would be greater.
• C) higher per-capita output and lower per-capita depreciation.
• D) lower per-capita output and higher per-capita depreciation.

---

Definitions:

Average Utility

The total utility received from a certain amount of goods or services divided by the number of goods or services consumed.

Diminishing Marginal Utility

The principle that as a person consumes more of a good, the additional satisfaction gained from consuming an additional unit decreases.

Plastic Bins

Containers made of plastic material used for storing or transporting items.

Door Hooks

Hardware items typically mounted on doors or walls for hanging or holding clothes, towels, and other items securely.