In the neoclassical theory of growth a higher saving rate leads to ?
Correct answer: D. no change in the growth rate
- A. a higher growth rates
- B. a fluctuating growth rate
- C. a fluctuating growth rates
- D. no change in the growth rate
Explanation
In the neoclassical growth model, a higher saving rate raises the steady-state level of output per worker and causes temporary transitional growth, but it does not permanently raise the long-run growth rate. Sustained growth in output per worker comes from technological progress.
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