Figure 10-4

-Initially,the economy is at point G in Figure 10-4 above.An increase in per capita savings from s(0)to s(1)will in the short run result in ________ and in the long run result in ________.

Question

Figure 10-4
 
-Initially,the economy is at point G in Figure 10-4 above.An increase in per capita savings from s(0)to s(1)will in the short run result in ________ and in the long run result in ________.

Quizplus · Accepted Answer

In the short run, an increase in per capita savings leads to more rapid growth in per capita output due to increased investment. However, in the long run, the growth rate returns to its original rate due to diminishing returns to capital.

Figure 10-4 -Initially,the Economy Is at Point G in Figure 10-4 Above.An