If the national saving rate increases,the:

Question

Quizplus · Accepted Answer

When the national saving rate increases, it leads to an increase in investment and capital accumulation. This, in turn, increases the capital-labor ratio, which results in economic growth. However, this growth will only last until a new, higher, steady-state capital-labor ratio is reached, after which the economy will continue to grow at a normal rate. Hence, option C is the correct choice. Option A and D are incorrect since the economy cannot continue to grow at a faster rate forever, and an increase in the saving rate will not lead to a decline in the capital-labor ratio. Option B is also incorrect since an increase in the saving rate does not necessarily lead to a constant or continuous increase in the capital-labor ratio.

If the National Saving Rate Increases,the