The Golden Rule capital-labor ratio is the level of the capital-labor ratio that,in the steady state,
A)maximizes output per worker.
B)maximizes investment per worker.
C)maximizes consumption per worker.
D)maximizes capital per worker.

Question

Quizplus · Accepted Answer

The Golden Rule capital-labor ratio is the level of the capital-labor ratio that maximizes consumption per worker in the steady state. This concept is key in the Solow growth model, indicating the optimal amount of capital accumulation that allows for the highest possible standard of living in the long run.

The Golden Rule Capital-Labor Ratio Is the Level of the Capital-Labor