The golden-rule saving rate is the rate of saving that ?
Correct answer: C. maximizes the level of long-run consumption
- A. gets the highest rate of interest
- B. maximizes the level of long-run investment
- C. maximizes the level of long-run consumption
- D. maximizes human capital
Explanation
In the Solow growth model, the golden-rule saving rate produces the highest sustainable level of consumption per worker in the long run. It is not defined by the highest interest rate or maximum investment alone.
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