An increase in the saving rate will generally cause an increase in productivity growth in the long run.

Question

Quizplus · Accepted Answer

This statement is supported by the theory of endogenous growth, which suggests that higher savings rates lead to higher investment in physical and human capital, resulting in increased productivity growth over time. Additionally, higher savings rates also lead to increased investment in research and development, which can further contribute to productivity growth.

An Increase in the Saving Rate Will Generally Cause an Increase