Suppose an Economy Is Initially in a Steady State with Capital

Multiple Choice

Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level. If the saving rate increases to a rate consistent with the Golden Rule, then in the transition to the new steady state consumption per worker will:

A) always exceed the initial level.
B) first fall below then rise above the initial level.
C) first rise above then fall below the initial level.
D) always be lower than the initial level.