In terms of capital growth, what the relationship between MPK and depreciation at the Golden Rule?

The correct choice is that the marginal product of capital (MPK) equals depreciation at the Golden Rule level of capital. The Golden Rule in economics refers to the optimal level of capital accumulation that maximizes steady-state consumption per capita.

At this point, the economy is in a state where the additional output produced by an additional unit of capital (represented by MPK) is precisely balanced with the amount of capital that is lost due to depreciation. This equilibrium ensures that all resources are being utilized efficiently and that no additional net gains in consumption per capita can be achieved by further increasing or decreasing the capital stock.

In practical terms, if MPK were greater than depreciation, it would indicate that adding more capital would yield a higher return than what is lost to depreciation, leading to underinvestment in capital. Conversely, if MPK were less than depreciation, it would suggest that the economy is overinvesting in capital, as the returns do not compensate for the loss due to depreciation. The Golden Rule focuses on achieving the state where the return on capital is optimally aligned with the costs associated with maintaining that capital, hence achieving maximum consumption per capita.