Suppose a Country Were to Increase Its Saving Rate

question 173

Multiple Choice

Suppose a country were to increase its saving rate. In the long run, what would also increase?

• A) its income and productivity levels
• B) its income growth rate and productivity level
• C) its income level and productivity growth rate
• D) its income and productivity growth rates

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Definitions:

Financial Break-Even

The point at which total revenues and total expenses are equal, resulting in a net income of zero and indicating that a project or business is neither losing nor making money.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and loan payments.

Contribution Margin

The amount by which the sales revenue of a product exceeds its variable costs, indicating how much contributes to covering its fixed costs and generating profit.

Variable Cost

Costs that change in proportion to the good or service that a business produces, varying depending on production volumes.