In the Neoclassical Growth Model, If a Nation's Savings Rate

question 23

Multiple Choice

In the neoclassical growth model, if a nation's savings rate decreases, we should expect that

• A)the long-run income per capita will increase
• B)the long-run capital-labor ratio will increase
• C)the growth rate of output will temporarily decrease but eventually return to its long-run trend
• D)all of the above
• E)none of the above

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Definitions:

Dividends Declared

Profits announced by a company's board of directors to be distributed among shareholders.

Non-Cash Assets

Assets owned by a company that are not in the form of cash but may include items like equipment, real estate, and intellectual property.

Market Value

The current price at which an asset or service can be bought or sold in a public market.

Stock Split

A corporate action that increases the number of shares outstanding by issuing more shares to current shareholders, typically to make the stock more affordable.