For This Question,assume That a Country Experiences a Permanent Reduction

question 47

Multiple Choice

For this question,assume that a country experiences a permanent reduction in its saving rate.Which of the following will occur as a result of this reduction in the saving rate?

• A)a permanently slower growth rate of output
• B)no permanent effect on the level of output per capita
• C)a permanently lower level of output per worker
• D)both A and B
• E) both B and C

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Definitions:

Budget Deficits

A financial situation where a government's expenditures exceed its revenues over a specified period, leading to borrowing or drawing down reserves.

Functional Finance

An economic theory that prioritizes achieving full employment and stable prices over balancing budgets.

Potential GDP

The maximum output an economy can produce without causing inflation, when operating at full employment.

Government Budget

A financial statement presenting the government's proposed revenues and spending for a fiscal period, reflecting policy priorities and economic goals.