Suppose policy makers wish to increase steady state consumption per worker. Explain what must happen to the saving rate to achieve this objective
What will be an ideal response?
it depends! Whether the saving rate must increase, decrease, or remain constant depends on what the current saving rate is compared to the golden rule saving rate. If s < sg, the saving rate must increase to increase steady state consumption. If s > sg, the opposite must occur.
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The branch of economics that studies the economy as a whole is: a. normative economics. b. positive economics
c. microeconomics. d. macroeconomics.
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