An increase in the __________ leads to a higher steady-state level of output per worker;and a decline in __________ leads to a lower steady-state level of output per worker.
A)productivity;saving rate
B)saving rate;productivity
C)saving rate;depreciation rate
D)Both a and b are correct.
E)none of the above

Question

Quizplus · Accepted Answer

An increase in productivity leads to a higher steady-state level of output per worker because it allows workers to produce more goods and services with the same amount of inputs. A decline in the saving rate leads to a lower steady-state level of output per worker because it reduces the amount of capital available for investment, which in turn reduces the productivity of workers.

An Increase in the __________ Leads to a Higher Steady-State