An increase in ________ leads to a higher steady-state level of output per worker, and a decline in the ________ leads to a lower steady-state level of output per worker.
A) productivity; saving rate
B) the saving rate; initial capital stock
C) the saving rate; depreciation rate
D) the initial capital stock; saving rate
E) None of these answers are correct.

Question

Quizplus · Accepted Answer

Productivity is the amount of output produced per unit of input. An increase in productivity leads to a higher steady-state level of output per worker. The saving rate is the percentage of income that is saved. A decline in the saving rate leads to a lower steady-state level of output per worker.

An Increase in ________ Leads to a Higher Steady-State Level