Question

    T he Golden Rule of Capital in the Solow Growth Model is

    that level of steady-state capital per worker where,               I.        Output per worker is maximized.             II.        Consumption per worker is maximized.            III.        The economy has the optimal saving rate, sgold.
    A Statements I, II, and III are correct Correct Answer Incorrect Answer
    B Statements I and II are correct Correct Answer Incorrect Answer
    C Statements I and III are correct Correct Answer Incorrect Answer
    D Statements II and III are correct Correct Answer Incorrect Answer
    E Statement II is correct. Correct Answer Incorrect Answer

    Solution

    Statements II and III are correct. Golden Rule of Capital in the Solow Growth Model is that level of steady-state capital per worker where, Consumption per worker is maximized and the economy has the optimal saving rate, sgold.

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