An increase in the saving rate in a steady-state economy would cause

Question

Quizplus · Accepted Answer

In a steady-state economy, increasing the saving rate leads to an increase in the saving-per-worker curve. This is because more saving per worker leads to an increase in the amount of capital available for each worker. This, in turn, results in an increase in the capital-labor ratio, which is shown graphically by an upward shift in the saving-per-worker curve. Therefore, the correct answer is (B).

An Increase in the Saving Rate in a Steady-State Economy