Other things the same, a country that increases its savings rate will have
A)higher future capital and higher future real GDP per person.
B)higher future capital but not higher future real GDP per person.
C)higher future real GDP per person but not higher future capital.
D)neither higher future capital nor higher future real GDP per person.

Question

Quizplus · Accepted Answer

An increase in the savings rate allows more resources to be diverted towards investment in capital goods. This leads to an accumulation of capital, which in turn enhances productivity and results in higher future real GDP per person.

Other Things the Same, a Country That Increases Its Savings