At the Current Steady State Capital-Labor Ratio,assume That the Steady

question 74

Multiple Choice

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

• A)a reduction in the saving rate will cause a decrease in the steady state level of per capita consumption ((C / N)*).
• B)an increase in the capital-labor ratio will cause an increase in (C / N)*.
• C)the capital labor ratio will tend to decrease over time.
• D)the capital labor ratio will tend to increase over time.
• E) a reduction in the saving rate will have an ambiguous effect on (C / N)*.

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