Assume That a Fiscal Policy Action Results in a Decrease

question 4

Multiple Choice

Assume that a fiscal policy action results in a decrease in the saving rate. This decrease in the saving rate will cause a decrease in which of the following once the economy reaches its new steady state equilibrium?

• A) The growth rate of output.
• B) The growth rate of capital per worker.
• C) The growth rate of capital.
• D) All of the above.
• E) None of the above.

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Definitions:

Raw Materials

Basic materials that are used in the production of goods, finished products, or intermediate materials that are feedstock for future finished products.

Labour

The human work effort, both physical and mental, used in the production of goods and services.