Following an increase in the saving rate,consumption per worker ________.
A)increases
B)decreases
C)is unaffected
D)may either rise or fall

Question

Quizplus · Accepted Answer

An increase in the saving rate can lead to different outcomes for consumption per worker depending on the context. In the short term, consumption may decrease as more income is directed towards savings. However, in the long term, the increased savings can lead to higher investment, potentially increasing productivity and income, which could raise consumption per worker. Thus, consumption per worker may either rise or fall following an increase in the saving rate.

Following an Increase in the Saving Rate,consumption Per Worker ________