Figure 10-4
-Initially, the economy is at point G in the figure above An increase in per capita savings from s(0) to s(1) will in the short run result in ________ and in the long run result in ________.

Question

Figure 10-4 
-Initially, the economy is at point G in the figure above An increase in per capita savings from s(0) to s(1) will in the short run result in ________ and in the long run result in ________.

Quizplus · Accepted Answer

In the short run, an increase in per capita savings can lead to more rapid growth in per capita output as more resources are available for investment. However, in the long run, the growth rate of per capita output is determined by factors like technological progress, not just savings, so the long run rate of growth remains unchanged.

Figure 10-4 -Initially, the Economy Is at Point G in the Figure