Question

In the Solow model, what is the effect of an increase in the saving rate on the long-term growth rate of an economy?

A It leads to a permanent increase in the long-term growth rate of output.

B It has no effect on the long-term growth rate of output, but increases the steady-state level of output.

C It decreases the long-term growth rate of output by causing higher capital accumulation

D It causes both the long-term growth rate of output and the steady-state level of output to increase permanently

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