If a country's saving rate increases,then in the long run
A)productivity is higher but real GDP per person is not higher.
B)real GDP per person is higher but productivity is not higher.
C)productivity and real GDP per person are both higher.
D)neither productivity nor real GDP per person is higher.

Question

Quizplus · Accepted Answer

When a country's saving rate increases, it means that more capital is available for investment. This leads to an increase in productivity since investment can be used to improve technology, machinery and equipment, and worker training. This increased productivity, in turn, leads to an increase in real GDP per person as more goods and services can be produced with the same amount of resources. Therefore, the correct choice is (C).

If a Country's Saving Rate Increases,then in the Long Run