For this question,assume that a country experiences a permanent reduction in its saving rate.Which of the following will occur as a result of this reduction in the saving rate?
A)a permanently slower growth rate of output
B)no permanent effect on the level of output per capita
C)a permanently lower level of output per worker
D)both A and B
E) both B and C

Question

Quizplus · Accepted Answer

A permanent reduction in the saving rate leads to a lower steady-state level of capital per worker, which results in a permanently lower level of output per worker. However, it does not affect the long-term growth rate of output, which is determined by factors like technological progress.

For This Question,assume That a Country Experiences a Permanent Reduction