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Answer :
Final answer:
No, the economy is beyond its golden-rule level of capital per worker so any increase in saving will lead to lower consumption per worker in the long run.
Explanation:
In the long run, a policy to promote increases in private saving would not lead to an increase in consumption per worker. This is because the economy is beyond its golden-rule level of capital per worker. When the economy is already at this level, any increase in saving will actually cause lower consumption per worker. On the other hand, if the economy is below its golden-rule level, increased saving would increase capital accumulation. This can lead to higher production and consumption per worker in the long run till it reaches the golden-rule level of capital.
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