Figure below shows the initial steady state of the economy where capital per worker (k) is equal to ki. Suppose that the government has a policy tool that would enable it to influence the consumers' savings rate (s). Use the figure below to find out if the government should try to increase or decrease s if it wants to bring k' closer to the golden rule quantity of capital per worker (kgr). Recall that kar is the value of k" for which the slope of the production function y = zf (k) is equal to n+d. Explain what you are doing.

Figure below shows the initial steady state of the economy where capital per worker (k) is equal to ki. Suppose that the government has a policy tool that would enable it to influence the consumers' savings rate (s). Use the figure below to find out if the government should try to increase or decrease s if it wants to bring k' closer to the golden rule quantity of capital per worker (kgr). Recall that kar is the value of k" for which the slope of the production function y = zf (k) is equal to n+d. Explain what you are doing.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Economic Growth: Resources, Technology, Ideas And Institutions

Section: Chapter Questions

Problem 6WNG

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