Question

If the marginal product of capital net of depreciation equals 10 percent and the rate of population growth equals 2 percent, then this economy will be at the Golden Rule steady state if the rate of technological progress equals _____ percent. A. 0 B. 2 C. 8 D. 10

Answer 1

Answer:

The answer to this question is C. 8 percent.

Explanation:

As we know the depreciation equals 10 percent.

Population growing at the rate of 2 percent.

Golden Rule:-The level of capital accumulation is the steady state having highest level of consumption.

If the rate of technological progress equals 8 percent.The economy will be at Golden Rule steady state.

Hence we conclude that the answer is 8 percent.