Figure 8.1
-Refer to Figure 8.1. If the saving rate were s1 and the economy's level of K is at K1, then:

Question

Quizplus · Accepted Answer

According to the Solow model, an increase in the saving rate leads to an increase in the level of capital in the economy in the long run. Therefore, if the saving rate were s1 and the economy's level of K is at K1, the level of capital K in the economy will increase to a new steady-state level.

Figure 8.1 -Refer to Figure 8.1. If the Saving Rate Were S1