Currently a country has real GDP per person of 500.Raising capital per worker by one would increase output per worker by 4.Other things the same,which of the following long-run combinations are consistent with the effects of this country increasing its saving rate?

Question

Quizplus · Accepted Answer

Increasing the saving rate typically leads to higher capital accumulation, which increases real GDP per person. However, due to diminishing returns, the marginal increase in output per worker from additional capital decreases. Hence, real GDP per person increases to 520, and the increase in output per worker from additional capital decreases to 3.

Currently a Country Has Real GDP Per Person of 500