1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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.

You might be interested in
Assume the MPC is 0.6. If government were to impose $10 billion of new taxes on household income, consumption spending would ini
mihalych1998 [28]

Answer:

$6 billion

Explanation:

Calculation to determine what consumption spending would initially decrease by

Using this formula

Decrease in Consumption spending=MPC * New taxes on household income

Let plug in the formula

Decrease in Consumption spending=0.6*$10 billion

Decrease in Consumption spending=$6 billion

Therefore consumption spending would initially decrease by $6 billion

4 0
3 years ago
The United States and France both produce sweaters and caps. Suppose that a US worker can produce 50 caps per hour or 1 sweater
Andrews [41]
Answer
B
Explanation
5 0
3 years ago
Kingbird Inc. owns equipment that cost $672,000 and has accumulated depreciation of $174,000. The expected future net cash flows
aev [14]

Answer:

Explanation:

In this scenario, we compare the values between book value and the fair value of equipment, the difference would be the loss on impairment of the asset

In mathematically,  

= Book value - fair value

where,

Book value = Equipment cost - accumulated depreciation

                   = $672,000 - $174,000

                   = $498,000

And, the fair value is $384,000

Now put these values to the above formula  

So, the value would equal to

= $498,000 - $384,00

= $114,000

Now the journal entry would be

Loss on impairment A/c Dr $114,000

      To Accumulated depreciation A/c $114,000

(Being the impairment loss is recorded)

4 0
3 years ago
In a market economy, decisions about which goods are produced are based
STatiana [176]

Answer:

B. what businesses believe will generate the most profits.

Explanation:

A market economy is one where the factors of production are owned by the private sector. Production and distribution of products and services are in the hands of private individuals and firms. The government's role is mostly regulation and the provision of public goods.

In the market economy, the private sector engages in business to make profits. They risk their resources in producing goods and services that can increase their wealth. Only the products that are likely to generate profits are produced.

4 0
2 years ago
"when the economist says that material wants are insatiable, he means that:"
Ede4ka [16]
<span>When the economist says that material wants are insatiable, he means that these wants are virtually unlimited and therefore incapable of complete satisfaction. Insatiable means that they are impossibly to satisfy. In the economic world it is best to make use of the limited resources to help satisfy virtually unlimited wants. </span>
4 0
3 years ago
Other questions:
  • Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $512,000 or a new model
    5·1 answer
  • Imagine that you are the head of recruiting for a major airline. You are charged with replacing several department-head position
    8·1 answer
  • Ideally, capital budgeting analysis should take cash flows into account . Understanding the nature of projects Capital budgeting
    15·1 answer
  • Why is teen crashes a problem, especially for teen drivers?
    14·2 answers
  • Which of the following is correct with respect to rainy day funds? Multiple Choice Rainy day funds are classified as committed o
    8·1 answer
  • Shanghai Company sells glasses, fine china, and everyday dinnerware. They use activity-based costing to determine the cost of th
    14·1 answer
  • Which type of identity theft occurs when a thief uses someone else's identity to commit a crime?
    7·2 answers
  • A firm is considering an investment in a new advertising project. The project will produce a cash flow of $1,000 in one year and
    7·1 answer
  • What is the proper balance between dealing with negative externalities through government regulation or through torts?
    12·1 answer
  • Which statement best summarizes the information on these graphs? many bolivians are farmers, but the agriculture sector does not
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!