How long does this higher rate of growth last

Reference no: EM133408906

Question: Suppose that a government pursues policies that raise the nation's saving rate-the percentage of GDP devoted to saving rather than consumption. What happens? With the nation saving more, fewer resources are needed to make consumption goods, and more resources are available to make capital goods. As a result, the capital stock increases, leading to rising productivity and more rapid growth in GDP. But how long does this higher rate of growth last? Assuming that the saving rate remains at its new higher level, does the growth rate of GDP stay high indefinitely or only for a period of time?

Reference no: EM133408906

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