Consider an economy whose current saving rate (s) is lower than its golden rule saving rate...
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Consider an economy whose current saving rate (s) is lower than its golden rule saving rate (SGOLD). Assume that the economy has a positive depreciation rate, population growth rate and growth rate of technological progress. Illustrate this situation. Be sure to label the axes; curves for actual steady-state investment, golden rule steady-state investment, break-even steady-state investment, and the steady-state production function; the current steady-state capital per effective worker; and the golden rule level of capital per effective worker. Consider an economy whose current saving rate (s) is lower than its golden rule saving rate (SGOLD). Assume that the economy has a positive depreciation rate, population growth rate and growth rate of technological progress. Illustrate this situation. Be sure to label the axes; curves for actual steady-state investment, golden rule steady-state investment, break-even steady-state investment, and the steady-state production function; the current steady-state capital per effective worker; and the golden rule level of capital per effective worker.
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