Assume that an economy experiences both positive population growth and technological progress.A reduction in the saving rate will cause
A)no change in K / NA.
B)a permanent reduction in the rate of growth of output per worker.
C)a permanent reduction in the rate of growth of output.
D)no change in Y / NA.
E) none of the above

Question

Quizplus · Accepted Answer

A reduction in the saving rate will lead to a lower steady-state level of capital per effective worker (K/NA) and output per effective worker (Y/NA), but it does not affect the long-term growth rates of these variables, which are determined by technological progress and population growth.

Assume That an Economy Experiences Both Positive Population Growth and Technological