Other things the same, if a country increased its saving rate, in 40 years which of the following would that country likely have?
A)higher productivity and a higher growth rate of real GDP
B)higher productivity but not a higher growth rate of real GDP
C)the same productivity and growth of real GDP it began with
D)higher productivity growth rate and higher real GDP

Question

Quizplus · Accepted Answer

Increasing the saving rate leads to more investment in capital, which raises productivity. However, the growth rate of real GDP may not increase in the long run due to diminishing returns to capital.

Other Things the Same, If a Country Increased Its Saving