If a country's saving rate increases, what happens in the long run?
A) Income decreases faster.
B) Productivity increases faster.
C) Productivity decreases.
D) Income increases.

Question

Quizplus · Accepted Answer

When a country's saving rate increases, it means that individuals are putting aside a higher proportion of their income for future use rather than immediately consuming it. This means that there is a larger pool of funds available for investment in productive assets, such as factories, equipment, and technology. This, in turn, leads to an increase in productivity and economic growth, which ultimately results in higher income levels in the long run. Therefore, the best choice is D, income increases.

If a Country's Saving Rate Increases, What Happens in the Long