Question
How do I demonstrate this graphically? On A Ramsay Caas Koopmans model Consider an economy that follows the Ramsey Cass Koopmans model (with constant technology
How do I demonstrate this graphically? On A Ramsay Caas Koopmans model
Consider an economy that follows the Ramsey Cass Koopmans model (with constant technology A and population P) and is in the balanced growth path. At t0, the participation rate permanently decreases, that is, a smaller fraction of the population works. What are the dynamics of consumption?
a. c slowly increases, then starts to decrease again to the steady state.
b. c jumps up at t0, then gradually decreases towards the steady state
c. None of the other answers is correct.
d. c jumps down at t0, then slowly increases to the steady state.
e. c stays constant
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started