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One of the goals of the Obama administration is to develop and encourage the use of...

One of the goals of the Obama administration is to develop and encourage the use of new technologies, in particular, in the energy industry. What would be the effect of an increase in technology on the Golden Rule capital-labor ratio?

A.

An increase in technology will decrease the Golden Rule capital-labor ratio.

B.

An increase in technology will increase the Golden Rule capital-labor ratio.

C.

An increase in technology will have no impact on the Golden Rule capital-labor ratio.

D.

None of the above.

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Answer #1

the following will be the effect of an increase in technology on the Golden Rule capital-labor ratio:

C.An increase in technology will have no impact on the Golden Rule capital-labor ratio

as golden rule capital labor ratio is a steady state where the consumption per worker is maximum and the depreciation is equal to investment levels.

an increase in technology will increase the capital labor ratio and this ratio tries to reach at the golden rule level. .

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