If a country's saving rate increases, which of the following happens in the long run?
A)Its productivity is higher, but real GDP per person is not higher.
B)Its real GDP per person is higher, but productivity is not higher.
C)Its productivity and real GDP per person are both higher.
D)Neither its productivity nor real GDP per person are higher.

Question

Quizplus · Accepted Answer

When a country's saving rate increases, it leads to an increase in investment. This, in turn, leads to an increase in capital stock, which can increase worker productivity. As a result, the country's productivity and real GDP per person are likely to increase in the long run.

If a Country's Saving Rate Increases, Which of the Following