An increase in the saving rate does not permanently increase the growth rate of real GDP per person.

Question

Quizplus · Accepted Answer

While an increase in the saving rate can lead to temporary increases in capital accumulation and therefore real GDP per person, this effect eventually diminishes as the economy reaches its steady state level. In the long run, sustained economic growth depends on factors such as technological innovation, efficient allocation of resources, and human capital development.

An Increase in the Saving Rate Does Not Permanently Increase