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Naily [24]
3 years ago
13

Optimism imagine that the economy is in long-run equilibrium. then, perhaps because of improved international relations and incr

eased confidence in policy makers, people become more optimistic about the future and stay this way for some time. refer to optimism. in the short run what happens to the price level and real gdp?
a. the price level falls and real gdp rises.
b. the price level rises and real gdp falls.
c. both the price level and real gdp fall.
d. both the price level and real gdp rise.
Business
1 answer:
Feliz [49]3 years ago
8 0
<span>Under economic conditions where people are optimistic about the stability and equilibrium of the economy, price levels are likely to rise and GDP is likely to rise similarly. Confidence and optimism about future economic stability would allow consumers to buy good with confidence and for growth in price level and growth in real GDP to take place gradually and continually.</span>
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Explanation:

The Golden Rule savings rate is referred to as the rate of savings which maximizes steady state level or growth of consumption.

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K/Y= 0.3/0.07

K/Y= 4.29

In the golden state, the capital output ratio is equal to 4.29 in comparison to the current capital ratio 2.5.

The saving rate consistent with the steady growth rate

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The saving rate that is consistent with the steady growth rate is 0.30

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Answer

The answer and procedures of the exercise are attached in the following archives.

Notes: All working are part of answer and provided as an ‘Equation Column’

BOLDED portion is the part of required answer

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