Fretonia and Libstien Are the Same Except Fretonia Has a Larger

question 104

Multiple Choice

Fretonia and Libstien are the same except Fretonia has a larger capital stock.Both countries undertake policies that raise their saving rates to the same higher level.We would expect that

• A)both countries would have permanent increases in their growth rates,but the increase would initially be larger in Fretonia.
• B)both countries would have permanent increases in their growth rates,but the increase would initially be smaller in Fretonia.
• C)both countries would have temporary increases in their growth rates,but the increase would be larger in Fretonia.
• D)both countries would have temporary increases in their growth rates,but the increase would be smaller in Fretonia.

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