Consider two economies with the same GDP per capita: Barylia and Lithasia.The saving rate in Barylia is 20 percent,while the saving rate in Lithasia is 60 percent.
a)Which of these two countries is likely to accumulate physical capital faster?
b)The government in Barylia decides to provide incentive to its citizens to increase the saving rate further to 80 percent as a means of improving standards of living.Will the increase in saving translate into improvements in the standard of living?

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The Answer of Consider two economies with the same GDP per capita: Barylia and Lithasia.The saving rate in Barylia is 20 percent,while the saving rate in Lithasia is 60 percent.
a)Which of these two countries is likely to accumulate physical capital faster?
b)The government in Barylia decides to provide incentive to its citizens to increase the saving rate further to 80 percent as a means of improving standards of living.Will the increase in saving translate into improvements in the standard of living?

Consider Two Economies with the Same GDP Per Capita: Barylia