Which of the Following Best Describes the Response of Output

question 123

Multiple Choice

Which of the following best describes the response of output as time passes to an increase in the saving rate?

• A)The growth rate of output does not change.
• B)The growth rate of output increases and gets even larger as time passes.
• C)The growth rate of output increases and does not change as time passes.
• D)The growth rate of output increases,but diminishes to its former level as time passes.

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Definitions:

Present Value

The here and now valuation of a prospective future financial amount or series of cash flows, calculated with a certain return rate.

Future Value

The value of an investment at a specified date in the future, taking into account factors like interest rates and compound interest.

Interest-on-Interest

Earnings on the reinvestment of previous interest payments on fixed income investments or savings.

Reinvested

The process of using earned profits or dividends to purchase additional shares or assets, rather than distributing them as dividends.