In the steady state of the Solow growth model A) consumption ...

[magmichele12]

In the steady state of the Solow growth model
 
  A) consumption equals depreciation.
  B) per capita variables grow at the rate of population growth.
  C) aggregate consumption grows at a constant rate.
  D) aggregate output is constant.

Question 2

How does central bank independence cause lower inflation?
 
  What will be an ideal response?

[samiel-sayed]

Answer to Question 1

C

Answer to Question 2

Central bank independence implies low expected inflation, which ensures that the short-run aggregate supply curve is always in or moving toward a position consistent with low inflation. An independent central bank has little if any incentive to allow inflation to rise uncontrollably. Though inflation may rise for many reasons beyond central bank control, expected inflation will not remain high, so long as it is known that the central bank will not knowingly pursue an inflationary policy.