Question
The economy of Ozlandia can be described by the Solow growth model. In Ozlandia the labour force grows at 0.02 per year, labour-augmenting technology increases
The economy of Ozlandia can be described by the Solow growth model. In Ozlandia the labour force grows at 0.02 per year, labour-augmenting technology increases at 0.03 per year, the saving rate is 0.15 per year, and the rate of capital depreciation is 0.10 per year.
If the marginal product of capital (MPK) is 0.18 per year, the steady-state capital stock in the economy of Ozlandia is:
A. less than the Golden Rule level.
B. equal to the Golden Rule level.
C. more than the Golden Rule level.
D. could be either above or below the Golden Rule level.
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