Which of the following is a characteristic of the 'Overlapping Generations' model?
A. Agents live for only one period
B. Agents live for multiple periods and different generations coexist
C. There is a single infinitely-lived representative agent
D. Only static optimisation is considered
Answer: Option B
Solution (By JKSSB Mock Tests)
In overlapping-generations models, individuals live for a finite number of periods and at any date several generations coexist, allowing analysis of intergenerational issues and dynamic inefficiency.
Explanation:
GDP includes depreciation (capital consumption). NNP is obtained by subtracting depreciation from GNP. Thus depreciation is part of GDP but not of NNP.
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