Suppose a country were to increase its saving rate. In the long run, which of the following would also increase?
A)its level of income
B)its growth rate of income
C)its growth rate of productivity
D)its growth rate in capital stock

Question

Quizplus · Accepted Answer

In the long run, an increase in the saving rate leads to a higher level of income due to more capital accumulation, but it does not permanently increase the growth rates of income, productivity, or capital stock.

Suppose a Country Were to Increase Its Saving Rate