Other things the same, if a country increased its saving rate what would that country likely have in 40 years?
A) higher productivity and a higher growth rate of real GDP
B) higher productivity but not a higher growth rate of real GDP
C) the same productivity and growth of real GDP it began with
D) higher productivity growth rate and higher real GDP

Question

Quizplus · Accepted Answer

Increasing the saving rate in a country typically leads to higher investment in capital goods, which boosts productivity. However, the growth rate of real GDP over time is determined by technological progress and other factors, not just the saving rate. The initial increase in saving can lead to a level effect, raising productivity and thus real GDP, but it doesn't necessarily increase the long-term growth rate of real GDP.

Other Things the Same, If a Country Increased Its Saving