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Natalija [7]
3 years ago
12

Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level.

Business
1 answer:
daser333 [38]3 years ago
3 0

Answer:

B) first fall below then rise above the initial level.

Explanation:

'Steady State' & 'Golden Rule' of capital per worker : are concepts of Solow model.

The model defines output (income) per worker as a function of capital per worker, increasing with it at a diminishing rate, & hence the curve is upward sloping swamp shaped. Depreciation is a constant slope straight upward sloping line. Saving is a function of income per worker.

  • Steady State level is the level of output at which savings (investment) by workers is equal to depreciation of capital stock.
  • Golden rule capital level refers to the saving rate, which maximises steady state level or growth of consumption.

If the saving rate increases to a rate consistent with the Golden Rule: the consumption per worker will first fall below the initial level (as savings proportion out of income are more). But, when these savings will be invested back, capital per worker will increase. High capital per worker will imply high output  & income per worker. And, then the consumption per worker will rise.

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Answer:

According to utility analysis, the consumer will be in equilibrium when he is spending money on goods in such a way that the marginal utility of each good is proportional to its price. Let us assume that, in his equilibrium position, consumer is buying q1 quantity of a good X at a price P1.

Explanation:

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3 years ago
The owner of a small business borrowed $70,000 with an agreement to repay the loan with quarterly payments over a five year time
siniylev [52]

Answer:

His loan payment each quarter is nearest to $4,705.10.

Explanation:

Using a Financial Calculator enter the following data and find PMT, the loan payment each quarter

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3 years ago
MacCloud Industries has two divisions-Standard and Premium. Each division has hundreds of different types of tennis racquets and
Helen [10]

Answer and Explanation:

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= ($240,000) ÷ ($1,000,000)

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= $1,250,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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3 years ago
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