Answer :
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a. The destruction of the nation's capital stock in a war would lead to a decrease in the long-run steady-state consumption. This is because a lower capital stock reduces the productive capacity of the economy, which in turn lowers the potential output and, consequently, the consumption level that can be sustained in the long run.
b. A permanent increase in the rate of immigration could potentially increase the long-run steady-state consumption. More immigrants mean a larger labor force, which can contribute to higher economic output and, ultimately, higher consumption levels if the economy is able to utilize this increased labor efficiently.
c. A permanent increase in energy prices would likely decrease the long-run steady-state consumption. Higher energy prices can increase production costs, leading to reduced output levels and, consequently, lower consumption levels that can be sustained in the long run.
d. A temporary increase in the saving rate would likely lead to higher long-run steady-state consumption. By saving more now, there would be more capital available in the future for investment, which can boost productivity and output, ultimately allowing for higher consumption levels in the long run.
e. A permanent increase in the fraction of the population in the labor force, with n unchanged, would generally increase the long-run steady-state consumption. A larger labor force means more workers contributing to economic output, potentially leading to higher consumption levels that can be sustained in the long run.
