In the Neoclassical Growth Model,if the Saving Rate S Increases,what

question 18

Multiple Choice

In the Neoclassical growth model,if the saving rate s increases,what will happen to the long-run growth rate of GDP?

• A) it increases.
• B) it decreases.
• C) it stays constant.
• D) we cannot determine the long-run growth rate of GDP without more information.

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Definitions:

Workers

Individuals engaged in physical or mental effort aimed at producing goods or providing services in exchange for wages.

Perfect Competitor

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, and no single firm can influence the market price.

Imperfect Competitor

An entity in a market that does not hold enough power to dictate the conditions of the market but can influence the price and output of its goods to some extent.

MRP

Marginal Revenue Product, the additional revenue generated from employing one more unit of a factor of production.