QUESTION 16 An economy with no population and no technology

QUESTION 16 An economy with no population and no technology growth is at its steady state. If the government decreases the savings rate from 0.17 to the golden rule savings rate, this will lead to higher consumption per worker in the long run an immediate decrease in consumption per worker higher output per worker in the long run an immediate decrease in output per worker

Solution

Ans

It will lead to higher consumption per worker as now more proportion of income is used for consumption