High School

We appreciate your visit to If tex MPK 0 5 tex in the steady state of an economy with tex S 0 05 tex and tex n 0 01 tex. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

If [tex]MPK = 0.5[/tex] in the steady state of an economy, with [tex]S=0.05[/tex] and [tex]n=0.01[/tex], then the steady-state level of capital per worker is _____ the Golden Rule level of capital per worker.

Answer :

Final answer:

The steady-state level of capital per worker is smaller than the Golden Rule level.

Explanation:

In an economy, the steady-state level of capital per worker is determined by the interaction of the marginal product of capital (MPK), savings rate (s), and population growth rate (n). The equation that represents this relationship is MPK = s / (n + δ), where δ represents the depreciation rate of capital. If MPK = 0.5, and the savings rate (s) = 0.05 and the population growth rate (n) = 0.01, we can substitute these values into the equation to find the steady-state level of capital per worker.

For the Golden Rule level of capital per worker, we need to find the level that maximizes consumption in the long run. This occurs when the savings rate is equal to the growth rate of the economy, so s = n. However, in this case, s = 0.05 and n = 0.01, so the steady-state level of capital per worker is smaller than the Golden Rule level.

Learn more about Steady-state level of capital per worker here:

https://brainly.com/question/33966618

#SPJ11

Thanks for taking the time to read If tex MPK 0 5 tex in the steady state of an economy with tex S 0 05 tex and tex n 0 01 tex. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

Rewritten by : Barada