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Consider the Long-Run Theory of Investment,saving,and Growth

Question 55

Multiple Choice

Consider the long-run theory of investment,saving,and growth.Which of the following statements concerning national saving is true?


A) A country's saving rate is unrelated to its growth rate.
B) An increase in the rate of saving will lead to a reduction in consumption and therefore to both a short-run and a long-run decrease in national income.
C) An increase in the rate of saving will cause an immediate increase in national income,but may cause a drop in national income in the long-run.
D) An increase in the rate of saving will always be offset by a reduction in private investment.
E) An increase in the rate of saving will lead to a short-run reduction in national income,but to higher economic growth in the long run.

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