If the Savings Rate Increases in the Solow Growth Model

question 17

Multiple Choice

If the savings rate increases in the Solow growth model

• A) output per capita increases in the long run.
• B) the growth rate in output per capita increases in the long run.
• C) capital per worker grows at a higher rate in the long run.
• D) the investment rate declines.
• E) output per capita falls in the long run.

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Definitions:

Probability

The determination of an event's likelihood, represented numerically from 0 to 1.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences.

Adverse Selection

A phenomenon where parties at a disadvantage due to asymmetric information are selected against in a market transaction, often leading to market failure.

Unobservable Actions

Actions taken by individuals or entities that cannot be seen or measured directly, often inferring effects through outcomes or reports.