Suppose an Economy Experiences an Increase in the Saving Rate

Multiple Choice

Suppose an economy experiences an increase in the saving rate. We know with certainty that this increase in the saving rate will:

A) increase steady state consumption only if the new saving rate is less than the golden rule rate.
B) decrease steady state consumption only if the new saving rate is less than the golden rule rate.
C) have no effect on steady state consumption.
D) increase steady state consumption.
E) decrease steady state consumption.