Suppose an Economy Is Initially in a Steady State with Capital

question 119

Multiple Choice

Suppose an economy is initially in a steady state with capital per worker exceeding the Golden Rule level. If the saving rate falls to a rate consistent with the Golden Rule, then in the transition to the new steady state, consumption per worker will:

• A) always exceed the initial level.
• B) first fall below then rise above the initial level.
• C) first rise above then fall below the initial level.
• D) always be lower than the initial level.

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Definitions:

Unconscious

The segment of the psyche which remains beyond the reach of conscious awareness, yet influences actions and feelings.

Conditional Positive Regard

A concept suggesting that acceptance and love from others are contingent upon one's behavior meeting certain conditions or standards.

Self-Actualization

The realization or fulfillment of one's talents and potentialities, considered a drive or need present in everyone.

Predetermined

Something established or decided in advance, not subject to change or influence by subsequent events.