An Increase in the Saving Rate Results in a Higher

question 45

Multiple Choice

An increase in the saving rate results in a higher steady state ________.

• A)growth rate of capital
• B)growth rate of output per worker
• C)level of consumption per worker
• D)level of capital per worker

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Definitions:

Ascribing Rationality

The assumption that individuals make decisions based on rational thought processes, maximizing utility based on available information.

Velocity of Circulation

The rate at which money is exchanged in an economy, reflecting the frequency with which money is spent on goods and services.

Rational Expectations Theory

The hypothesis that individuals form forecasts about the future based on all available information, including the understanding of economic policies, thus acting optimally on these expectations.

Aggregate Demand

The total demand for goods and services within a particular market or economy at a given price level and in a given time period.