Author Question: If a country increases its savings rate, the steady-state equilibrium level of: A) GDP will ... (Read 100 times)

NClaborn · **on:** Jun 30, 2018

If a country increases its savings rate, the steady-state equilibrium level of:

A) GDP will increase. B) investment will decrease.
C) capital stock will decrease. D) efficiency units of labor will increase.

Consider two economies: A and B. Both the countries have access to the same aggregate production function and have the same population and same efficiency units of labor, but have different saving rates. The savings rate is higher in country A in comparison to country B.

Question 2

Which of the following will lead to an increase in the gross domestic product of a country, all other variables remaining unchanged?

A) An increase in imports
B) An increase in consumption expenditure
C) A fall in the expenditure incurred by the government
D) A fall in the expenditure on investment goods