In the absence of technological progress,an increase in the saving rate will cause which of the following?
A)increase temporarily the growth of output per worker
B)increase the steady state growth of output per worker
C)decrease temporarily the growth of output per worker
D)decrease the steady state growth of output per worker
E) have an ambiguous effect on the growth of output per worker

Question

Quizplus · Accepted Answer

An increase in the saving rate leads to a temporary increase in the growth of output per worker by allowing more investment in capital per worker, which boosts productivity and output. However, without technological progress, this effect is not sustainable in the long run, leading to a return to the original steady-state growth rate.

In the Absence of Technological Progress,an Increase in the Saving