In the Combined Solow-Romer Model, an Exogenous Increase in the Saving

question 4

Multiple Choice

In the combined Solow-Romer model, an exogenous increase in the saving rate:

• A) immediately increases the growth rate of per capita output, which eventually slows to its previous rate.
• B) immediately decreases the per capita output, but the growth rate does not change.
• C) increases the growth rate of per capita income, but eventually the economy reaches a new steady-state level of per capita output.
• D) immediately decreases the growth rate of per capita output, which eventually accelerates to a higher rate.
• E) has no impact on the growth rate or level of per capita output.

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