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Consider the Solow model with no population growth or technological progress. The economy is in a steady state where capital per worker is below its
Consider the Solow model with no population growth or technological progress. The economy is in a steady state where capital per worker is below its golden rule steady state level. Then, if the government wants to maximize consumption per worker in the long run, they should ______ the saving rate. The current generation ___________ be supportive of the change.
a) increase; will not
b) decrease; will
is it a or b ?
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