If the Canadian Production Function Is Cobb-Douglas with Capital Share

question 46

Multiple Choice

If the Canadian production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the Golden Rule steady-state capital-output ratio is 4.29, to reach the Golden Rule steady state, the saving rate must be:

• A)17.5 percent.
• B)25 percent.
• C)30 percent.
• D)42.9 percent.

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