A reduction in a country's saving rate will tend to cause which of the following in the long run?
A) an increase in the standard of living
B) a reduction in economic growth
C) an increase in labor productivity
D) an increase in per capita real GDP

Question

Quizplus · Accepted Answer

A reduction in saving means less investment, which will lead to a reduction in economic growth in the long run. This is because investment is a key driver of economic growth, and without it, the economy may not be able to produce as much output as it could otherwise. The other choices are unlikely outcomes of a reduction in saving rate.

A Reduction in a Country's Saving Rate Will Tend to Cause