8. The golden rule capital stock is the steady-state capital stock where A. f'(k)= d B. sf'(k)= dk C. sf'(k)= d D. f'(k) = 1 E. sf (k)= dk

Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter14: Investment, The Capital Market, And The Wealth Of Nations
Section: Chapter Questions
Problem 3CQ
icon
Related questions
Question
I need help this questions and please provide justification
8. The golden rule capital stock is the steady-state capital stock where
A. f'(k)= d
B. sf'(k)= dk
C. sf'(k)= d
D. f'(k) 1
E. sf (k)= dk
Transcribed Image Text:8. The golden rule capital stock is the steady-state capital stock where A. f'(k)= d B. sf'(k)= dk C. sf'(k)= d D. f'(k) 1 E. sf (k)= dk
Expert Solution
Step 1

The MPK =δ  level, where the marginal product of capital matches the depreciation rate, is known as the Golden Rule capital stock. When the economy starts out with more capital than the Golden Rule level, achieving the Golden Rule level results in increased spending across all periods in time. 

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Investments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Macroeconomics: Private and Public Choice (MindTa…
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning