Suppose that a country increased its saving rate.In the long run it would have
A)higher productivity,and another unit of capital would increase output by more than before.
B)higher productivity,but another unit of capital would increase output by less than before.
C)lower productivity,and another unit of capital would increase output by more than before.
D)lower productivity,but another unit of capital would increase output by less than before.

Question

Quizplus · Accepted Answer

Increasing the saving rate leads to more capital accumulation, which raises productivity. However, due to diminishing returns to capital, each additional unit of capital contributes less to output than before.

Suppose That a Country Increased Its Saving Rate