Figure 10-4

-Initially,the economy is at point G in Figure 10-4 above.A change in per capita savings ________ will after complete adjustment ________.

Question

Figure 10-4
 
-Initially,the economy is at point G in Figure 10-4 above.A change in per capita savings ________ will after complete adjustment ________.

Quizplus · Accepted Answer

Point E represents a higher level of per capita savings than point G. Moving from point G to point E will result in an increase in investment, which will increase the potential growth rate of the economy. This increase in the potential growth rate will translate into an actual increase in the growth rate if the economy can generate enough productivity to take advantage of the increased investment. Thus, the change from point G to point E will raise the growth rate of output per capita.

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