In the long run an increase in the saving rate

Question

Quizplus · Accepted Answer

An increase in the saving rate leads to a higher level of investment which can fuel increased capital accumulation, technological advancement, and worker productivity, resulting in a higher level of economic output or Gross Domestic Product (GDP) per capita. This higher output can translate into higher income levels for households, especially in the long run. Therefore, an increase in the saving rate raises both the levels of productivity and income.

In the Long Run an Increase in the Saving Rate