If a country increases its saving rate in the long run
A)K/L and productivity will be higher.
B)K/L will be higher but productivity will not be higher.
C)K/L will not be higher but productivity will be higher.
D)neither K/L nor productivity will be higher.

Question

Quizplus · Accepted Answer

A higher saving rate leads to more investment, which increases the capital stock (K) per worker (L). With more capital per worker, productivity will be higher in the long run. Therefore, both K/L and productivity will be higher.

If a Country Increases Its Saving Rate in the Long