Suppose there are two countries that are identical with the following exception: the saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run:
A) economic growth will be higher in A than in B.
B) economic growth will be higher in B than in A.
C) output per capita will be the same in the two countries.
D) output per capita will be greater in B than in A.
E) output per capita will be greater in A than in B.

Question

Quizplus · Accepted Answer

In the long run, a higher saving rate in country A leads to a higher level of capital accumulation, which results in a higher output per capita compared to country B.

Suppose There Are Two Countries That Are Identical with the Following