An economy with no population and no technology growth is at its steady state. I

Question

An economy with no population and no technology growth is at its steady state. If the savings rate increases this will lead to O higher consumption per worker in the long run higher output per worker in the long run O an immediate increase in consumption per worker an immediate increase in output per worker QUESTION 19 In an economy with a population of 300 million, there are 50 million retirees, 50 million children aged less than 16 years, 185 million working at a paid job and 15 million people actively seeking a job but not currently working. The unemployment rate is 6% The labor force participation rate is 66.6% The labor force participation rate is 75% The unemployment rate is 7.5%. O

Explanation / Answer

18) An economy with a higher savings rate does affect the steady state capital stock and a level of output by increasing the both, but the effect is not permanent and is temporary. Thus, with a higher savings rate there occurs a temporary increase in the growth rate.

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19) Labour Force consists of the people which are above the working age population. In other force labour force includes the people who may be employed or unemployed but are above the working age.

Labour Force = 185 + 15 = 200 million

Labour force participation rate = (Labour Force / Total Population)*100 = (200 / 300) * 100 = 66.6%.

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