Monday, April 22, 2019
Explain and discuss the golden rule of accumulation and assess the Essay
Explain and discuss the golden detect of accumulation and assess the implications for macroeconomic indemnity - Essay ExampleAll such factors are considering by policy makers while implementing macroeconomic policies for the orbit. The nest egg investment behavior of the saving can be captured through neoclassical economics including the golden rule of accumulation. The golden rule is adopted to move towards optimum consumption. The golden rule determines the desired level of nest egg since under this level all profits are saved and then reinvested (Baumgartner and Meredith, 1995, p.6). Thus the current penning tends to discuss the golden rule of accumulation and its implications for macroeconomic policies.The production function of a country depicts how the country utilizes the available resources and inputs for producing output. Land, labor, capital and organization are termed as factors of production. We mainly use capital (K) and labor (L) as the two factors. It is given a s,Equally important as production is the concept of consumption which is the difference between income and savings. The consumption function depicts the relation between consumption and disposable income (Consumption Function). It is given as,Attainment of stiff accede means that an economy has gained stability. A country has attained steady state either due to step-up or decrease in growth. It occurs when production rates or the countrys investment equals depreciation. such a phenomenon is shown in the diagram below B B depreciation (k)Here it is seen that under the steady state output labor ratio becomes stagnant as investment becomes equal to depreciation at point A. production function determines the output- labor ratio at point B. Away from A the economy is converging towards steady state.Under the steady state the government requires to choose that level of
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