Consider the effects of an increase in the saving rate on the United States capital-labor ratio, according

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Consider the effects of an increase in the saving rate on the United States capital-labor ratio, according to the Solow model.

a) What would be the immediate effect of a saving rate increase on the capital-labor ratio? What would be the long-run effect?

b) Do you think it is beneficial to increase the saving rate? If so, by how much? (Would you save 95% of your income?)

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Macroeconomics Policy And Practice

ISBN: 978-0133424317

2nd Edition

Authors: Frederic Mishkin

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Question Posted: Feb 17, 2024 11:00 PM

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Consider the effects of an increase in the saving rate on the United States capital-labor ratio, according

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a In the Solow model an increase in the saving rate leads to an immediate increase in the capital st...View the full answer

Macroeconomics Policy And Practice

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