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

question 63

Multiple Choice

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

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

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Definitions:

Desired Profit

The target profit a company or an individual aims to achieve within a specific period.

Profitable

A financial state in which income exceeds costs and expenses, resulting in a net gain.

Constraint

A limitation or restriction on a process, system, or activity.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or profit.