Suppose a country were to increase its saving rate. In the long run, what would also increase?
A) its income and productivity levels
B) its income growth rate and productivity level
C) its income level and productivity growth rate
D) its income and productivity growth rates

Question

Quizplus · Accepted Answer

Increasing the saving rate in a country leads to more funds being available for investment in capital goods. Over time, this results in higher capital stock, which boosts productivity and, consequently, income levels. However, the growth rates of income and productivity may not permanently increase; instead, the levels of income and productivity are higher in the long run.

Suppose a Country Were to Increase Its Saving Rate