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Suppose There Is a Reduction in the Saving Rate

question 50

Essay

Suppose there is a reduction in the saving rate.Explain what effect this will have on output,output per worker,the rate of growth of output,and the rate of growth of output per worker.


Definitions:

External Financing

Funds a company raises from outside sources, like bank loans, issuing bonds, or equity financing from investors, to support its operations and growth.

Total Asset Turnover

A financial ratio that measures how efficiently a company utilizes its assets to generate sales.

Growth Determinant

Factors that influence the expansion and development of a company, sector, or economy, including technology, government policy, and market demand.

Sustainable Growth Rate

The rate at which a company can grow its sales, earnings, and dividends without borrowing new funds.

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