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Using the Solow model, assume the population growth rate is positively correlated with the saving rate, so that if the saving rate increases so does
Using the Solow model, assume the population growth rate is positively correlated with the saving rate, so that if the saving rate increases so does the population growth rate. Which of the following is true when the savings rate increases?
A) s> n + d (K/L)
B) (K/L)
C) (Y/L)
D) there is a permanent reduction in the growth rate of the GDP after the economy moves to the new steady state.
E) None of the above.
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