Suppose that in the steady state, consumption per worker takes the following form:
C/N = S(1s)/δ
Where C is consumption, s is the saving rate, and 8 is the depreciation rate.
What would be the steady-state level of consumption per worker if s = 0.70 and 8 = 0.08?
The steady-state level of consumption per worker is (Round your response to two decimal places.)
Given the information above, would a policy to promote increases in private saving lead to an increase in consumption per worker in the long run?
A. Yes, the economy is beyond its golden-rule level of capital per worker so any increase in saving will cause higher consumption per worker in the long run.
B. Yes, the economy is below its golden-rule level of capital per worker so any increase in saving will cause higher consumption per worker in the long run.
C. No, the economy is beyond its golden-rule level of capital per worker so any increase in saving will cause lower consumption per worker in the long run.
D. No, the economy is below its golden-rule level of capital per worker so any increase in saving will cause lower consumption per worker in the long run.