Suppose two economies are the same except that one has a low

Suppose two economies are the same except that one has a lower saving rate than the other. Then we would expect a) The country with a lower saving rate to grow at a lower rate than the economy with the higher saving rate. b) The country with a lower saving rate to grow at a higher rate than the economy with the higher saving rate. WI c) The country with the lower saving rate to have a lower level of output per capita than the country with the higher saving rate.

Solution

Lower savings rate will grow slower rate and higher savings rate will grow faster.

Lower savings rate has lower per capita and higher savings rate has higher per capita.

The correct option is (d) both a and c are true.