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Question 1 (10 points / 2 points for each question) Explain whether the following statement is true or false. If the statement is correct, elaborate
Question 1 (10 points / 2 points for each question) Explain whether the following statement is true or false. If the statement is correct, elaborate with the reason why it is correct. If the statement is incorrect, explain the reason and correct the statement. Use the theorem that we discussed in class. Before you write down the answer, organize your thoughts systematically. (Grading rubric: I will pay attention at the flow of your logic.) 1.1) Under the pure endowment model, a permanent decrease in income will always cause a decrease in the amount of saving. 1.2) Under the tax cut program with bond-financing deficit policy, government can increase the overall welfare of households if the level of output is exogenously given in both periods. 1.3) A decrease in the depreciation rate (d) will generate an expansionary impact to the key current macroeconomic variables, i.e. Y, C, I, N, w, r. 1.4) According to the growth model, income per capita will endogenously grow at a constant rate over time. 1.5) Under an increase in the total factor productivity (z), the Golden-rule saving rate (Sg) would increase
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