Which of the Following Will Cause a Reduction in the Steady-State

question 71

Multiple Choice

Which of the following will cause a reduction in the steady-state growth rate of output per worker?

• A)a reduction in the saving rate
• B)an increase in the population growth rate
• C)an increase in the rate of depreciation
• D)an increase in the saving rate
• E) none of the above

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Definitions:

Risk-free Interest Rate

The theoretical return on investment with zero risk of financial loss, typically associated with government bonds.

Total Risk

The sum of all risks affecting an investment, including both systematic (market) and unsystematic (individual) risks.

Systematic Risk

The danger associated with the overall market or a specific sector of the market that cannot be mitigated by spreading investments.

Capital Asset Pricing Model

A model used to determine the theoretical rate of return of an asset, considering the asset’s risk relative to that of the market.