An increase in the saving rate would,other things the same,
A)increase growth more for a poor country than for a rich country,and raise growth permanently.
B)increase growth more for a poor country than for a rich country,but raise growth temporarily.
C)increase growth more for a rich country than for a poor country,and raise growth permanently.
D)increase growth more for a rich country than for a poor country,but raise growth temporarily.

Question

Quizplus · Accepted Answer

An increase in the saving rate would increase growth more for a poor country than for a rich country, but it may raise growth only temporarily. The reason is that a poor country has less access to capital and may need to rely more heavily on foreign investment. Therefore, an increase in the saving rate would allow for more domestic investment and productivity gains. However, the economy may still face structural issues that hinder long-term growth, making it more challenging to sustain growth over time. In contrast, a rich country may already have access to substantial capital and may face diminishing returns to additional savings. Hence, the impact of an increase in the saving rate on growth may be more modest.

An Increase in the Saving Rate Would,other Things the Same