If a country's saving rate increases,which of the following happens in the long run?
A)Productivity does not change.
B)Real GDP per person decreases.
C)Real GDP per person does not change.
D)Productivity increases.

Question

Quizplus · Accepted Answer

In the long run, an increase in the saving rate leads to an increase in investment. Higher levels of investment increase the capital stock (machines, infrastructure, etc.) available to the workers, which enhances their productivity. Therefore, the correct choice is D.

If a Country's Saving Rate Increases,which of the Following Happens