Author Question: In the early 1990s, which nation took the lead in driving up European interest rates? A) Spain ... (Read 154 times)

mckennatimberlake · **on:** Jun 30, 2018

In the early 1990s, which nation took the lead in driving up European interest rates?

A) Spain
B) France
C) Germany
D) England
E) none of the above

Question 2

Briefly explain what effect a reduction in the saving rate will have on growth.

What will be an ideal response?

Kaytorgator · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

E

Answer to Question 2

A reduction in the saving rate will reduce investment, capital and output. During the adjustment process, the rate of growth of output will be negative. However, at some point, I, K and Y will no longer fall. So, the reduction in the saving rate will not have a permanent effect on the rate of growth of output.