In order to maximize the steady state level of consumption per worker, the Golden Rule steady...

In order to maximize the steady state level of consumption per worker, the Golden Rule steady state capital stock per worker (k^*_gold) satisfies the condition that the marginal productivity of capital at the k^*_gold capital level equals the depreciation rate . Graphically illustrate how to find the k^*_gold. (20 points)

Expert Solution

Rahul Sunny answered 2 years ago

Might a policymaker choose a steady state with more capital than in the Golden Rule steady...

Might a policymaker choose a steady state with more capital than in the Golden Rule steady state? With less capital than in the Golden Rule steady state? Explain your answers.

Suppose policy makers wish to increase steady state consumption per worker. Explain carefully and in detail...

Suppose policy makers wish to increase steady state consumption per worker. Explain carefully and in detail what must happen to the saving rate to achieve this objective. (Note: be careful to explore all possibilities). Show the evolution of consumption, investment and output over time.

Define the following: 5. Golden rule level of capital 6. Natural rate of output 7. Steady...

Define the following: 5. Golden rule level of capital 6. Natural rate of output 7. Steady state 8. J-curve

Suppose that the the economy is in a steady state where the capital stock per worker...

Suppose that the the economy is in a steady state where the capital stock per worker is above the golden-rule level. Illustrate this situation. To obtain the golden rule steady state, how should house- holds change their rate of savings? Suppose that the saving rate decreases at time t0. On a graph plot c, k, and i against t and show how the economy adjusts between the original and the new steady-state. Briefly explain why each variable is changing in...

How calculate the steady-state level of income per capita?

A) consider an economy that starts at a "per-person capital stock" above the golden rule level....

A) consider an economy that starts at a "per-person capital stock" above the golden rule level. in order to reach the golden rule one must what? -requite initially increasing consumption to decrease consumption in the future -require initially reducing consumption to increase it in the future -results in higher consumption at all times in the future -results in lower consumption in the future B) which of the following is a good explanation as to why the typical production function y=f(k,l)...

In the Solow growth model, the steady state value of capital per worker will surely increase...

In the Solow growth model, the steady state value of capital per worker will surely increase if: a. The saving rate decreases and population growth increases b. The saving rate increases and population growth decreases c. The saving rate decreases and population growth decreases d. The saving rate increases and population growth increases

According to the Solow model, in the steady state, both output per worker Y/L and the...

According to the Solow model, in the steady state, both output per worker Y/L and the capital stock per worker K/L grow at the rate of technological progress, and (choose one or both) A this is confirmed by U.S. data for the past half century—about 2 percent per year B this means that the capital-output ratio has remained approximately constant over time Technological progress also affects factor prices, and in the steady state, (choose two) A the real wage is...

The golden rule is defined as the saving rate that maximizes consumption at the balanced growth...

The golden rule is defined as the saving rate that maximizes consumption at the balanced growth path. Where is the golden rule higher? (also graphically). Why are they different?

. Using the Solow model, illustrate and explain an economy at the Golden Rule level of...

. Using the Solow model, illustrate and explain an economy at the Golden Rule level of capital per worker. Note: you must include the derivation of the mathematical condition in your answer.

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