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Unformatted text preview: increases because total output increases. The steady state consumption, however, never reaches the earlier level. This is the case where the saving rate before the increase is already higher than the Golden Rule saving rate (like the case in China). Consumption time t 2. If the production function is Y = K 0.4 L 0.6 . What is the per worker production function? A) y = k 0.4 B) y = k 0.6 C) Y = K 0.4 D) Y = L 0.6 Answer: A 3. A steady state for a country is achieved when: A) the country’s saving rate is high. B) the country’s saving = investment. C) the country becomes rich. D) the country’s investment = depreciation. Answer: D...
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- Spring '08
- Stock and flow, Capital accumulation, Per capita income, per capita consumption