Author Question: Which of the theory is better to think about policy? A) game theory B) optimal control theory ... (Read 82 times)

nmorano1

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Which of the theory is better to think about policy?
 
  A) game theory
  B) optimal control theory
  C) expectations theory
  D) none of the above

Question 2

Suppose there is an increase in the saving rate. Explain what effect this increase in the saving rate will have on the rate of growth of output per worker.
 
  What will be an ideal response?



Sophiapenny

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Answer to Question 1

A

Answer to Question 2

As described in answers for the previous chapter, an increase in the saving rate will only temporarily affect the growth rates of Y and Y/N. Once the new balanced growth equilibrium is achieved, the growth rates of Y and Y/N will return to their original levels.



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