rate,the real interest rate is higher.A higher real interest rate depresses investment and shifts the IS curve to the left,redueing income 9.What has happened to the rate of productivity growth over the past 40 years?How might you explain this phenomenon? 9.The rate of growth of output per person slowed worldwide after 1972.Thisslowdown appears to refleet a slowdo in productivity growth the rate at which the production function is improving over time.Various explanations have been proposed,but the slowdown remains a mystery.In the second half of the 1990s,productivity grew more quickly again in the United States and,it appears,a few other countries.Many commentators attribute the productivity revival to the effects of information technology. 10.Why might an economic policymaker choose the Golden Rule level of capital? 2.It is reasonable to assume that the objective of an economic policymaker is to maximize the economic well-being of the individual members of society.Since od 3ondstoS Apls 3s000 nous epends on ount of consumption,the Rule level of capital represents the level that maximizes consumption in the steady state.Suppose,for example,that there is no population growth or technological change.If the steady-state capital stock increases by one unit,then output increases by the marginal product of capital MPK;depreciation,however inereases by an am unto,so tha ne amount of extra output available consumption is MPK-8.The Golden Rule capital stock is the level at which MPK=6,so that the marginal product of capital equals the depreciation rate. rate,the real interest rate is higher. A higher real interest rate depresses investment and shifts the IS curve to the left,reducing income. 9.What has happened to the rate of productivity growth over the past 40 years?How might you explain this phenomenon? 9.The rate of growth of output per person slowed worldwide after 1972.This slowdown appears to reflect a slowdown in productivity growth—the rate at which the production function is improving over time.Various explanations have been proposed, but the slowdown remains a mystery.In the second half of the 1990s,productivity grew more quickly again in the United States and,it appears,a few other countries. Many commentators attribute the productivity revival to the effects of information technology. 10.Why might an economic policymaker choose the Golden Rule level of capital? 2.It is reasonable to assume that the objective of an economic policymaker is to maximize the economic well-being of the individual members of society.Since economic well-being depends on the amount of consumption,the policymaker should choose the steady state with the highest level of consumption.The Golden Rule level of capital represents the level that maximizes consumption in the steady state. Suppose, for example, that there is no population growth or technological change. If the steady-state capital stock increases by one unit,then output increases by the marginal product of capital MPK; depreciation, however, increases by an amountδ, so that the net amount of extra output available for consumption is MPK–δ. The Golden Rule capital stock is the level at which MPK=δ, so that the marginal product of capital equals the depreciation rate