Question: Intermediate Macro Question, looking for any advice on how to answer it. Thank you. An economy is in a steady state where the MPK =

Intermediate Macro Question, looking for any advice on how to answer it. Thank you.

Intermediate Macro Question, looking for any advice on how to answer it.

An economy is in a steady state where the MPK = 12%, depreciation is 4% per year, population growth is 2% per year, and the growth rate of efciency workers is 2% per year. Suppose a politician says the government should move the savings rate towards the value that maximizes consumption per worker. If the government cares only about people who are alive now, since they are voters, should the government implement this policy? Use all appropriate models, graphs and mathematics in your explanation

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!