A higher saving rate will promote capital deepening.

Question

Quizplus · Accepted Answer

When individuals or households save more, financial institutions have more resources to invest in new equipment, technology, and businesses. This leads to an increase in the amount of capital (in the form of machinery, buildings, and other productive assets) that is available in the economy. With more capital per worker, each worker can be more productive, leading to higher wages and economic growth. This process is known as capital deepening.

A Higher Saving Rate Will Promote Capital Deepening