Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 25 - Part IX - Production and Growth - Quick Check Multiple Choice - Page 546: 4

Answer

c. growth in the long run.

Work Step by Step

When the stock of capital increases, the extra output created from an additional unit of capital decreases. Diminishing returns causes an increase in the saving rate to lead to higher growth in the short run only. However, it will lead to higher income in the short run and long run.
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