Consider an economy at the steady state according to the Solow Growth Model with a per capita production function where n=0.04, d=0.08, and s=0.3. Suppose a change in the  age profile of the population leads to a reduction of the savings rate to s=0.28. As a result,Group of answer choicesconsumption initially falls but then increases to a new steady state level of consumption that is above the the original.consumption initially falls and continues to decline until reaching the new steady state.consumption initially rises but then decreases to a new steady state level of consumption that is below the the original.consumption initially rises and continues to increase until reaching the new steady state that is above the original.

In the Solow growth model, initially, the economy is in its steady state, at which the saving rate is lower than the Golden Rules saving rate. Suppose the saving rate is raised to the Golden Rules saving rate, which of the following is true for the effect on consumption per worker?A.Consumption per worker is always higher than the initial steady-state level of consumption in both the transition path and the new steady state.B.Consumption per worker is always lower than the initial steady-state level of consumption in both transition path and in the new steady state.C.Consumption per worker may be higher or lower than the previous steady-state level of consumption per worker on the transition path, but the new steady level of consumption per worker is higher.D.Consumption per worker may be higher or lower than the previous steady-state level of consumption on the transition path, but the new steady level of consumption per worker is lower.

Consider a basic Solow–Swan model. Suppose the aggregate production function is 𝑌=𝐴𝐾12𝐿12 and that A=1 , the depreciation rate is 𝛿=0.06  and the saving rate is 𝑠=0.12. In steady state, which of the following is TRUE?Group of answer choicesOutput per worker is 2.00 and consumption per worker is 0.24Output per worker is 2.00 and consumption per worker is 1.76Output per worker is 1.68 and consumption per worker is 1.48Output per worker is 1.68 and consumption per worker is 1.12

Suppose a closed economy can be described by the basic Solow growth model with no population growth or technological progress. If the saving rate increases, what will happen to the steady-state capital per worker and the steady-state output per worker? This is a multi answer question. You can select one or more options as the answer.A.The steady-state capital per worker will increase; the steady-state output per worker will decrease.B.Both steady-state capital per worker and steady-state output per worker will increase.C.The steady-state capital per worker will decrease; the steady-state output per worker will increase.D.Both steady-state capital per worker and steady-state output per worker will decrease.

Imagine a Solow–Swan model with the technology parameter (A) constant. The saving rate is θ, the population growth rate n, and the depreciation rate d. When the model has reached the steady state, the capital stock K will:Group of answer choicesBe constantBe rising at the rate nBe rising at the rate θ(Y/L)/(d + n)

Because of the change, according to the Solow growth model,I.  consumption c will be immediately lower than the steady state before the event change.II. steady state  consumption c* will be lower at the new steady state than it was at the steady state before the event change.Group of answer choicesneither I nor II are trueI is true but not IIboth I and II are trueII is true but not I