An Increase in the Saving Rate, in Solow's Neoclassical Growth

question 35

Multiple Choice

An increase in the saving rate, in Solow's neoclassical growth model,

• A) increases the rate of growth of output over the long run.
• B) decreases the rate of growth of output over the long run.
• C) increases the rate of growth of output temporarily.
• D) decreases the rate of growth of output temporarily.
• E) none of the above.

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Definitions:

Income Taxes

Taxes imposed by the government on the income generated by businesses and individuals within their jurisdiction.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Cash Budget

Budget that shows cash inflows and outflows during a period of time.

Shareholders' Equity

The portion of a company's assets that belongs to shareholders after liabilities have been subtracted; also known as net assets or equity.