Question

Lower Equitorial and Upper Equitorial are the same except Lower Equitorial has a larger capital stock. Both countries undertake policies that raise their saving rates to the same higher level. We would expect that :
both countries would have temporary increases in their growth rates, but the increase would be larger in Lower Equitorial.
both countries would have temporary increases in their growth rates, but the increase would be smaller in Lower Equitorial.

Answer 1

Answer:

both countries would have temporary increases in their growth rates, but the increase would be smaller in Lower Equitorial.

Explanation:

Capital Stock represents the plant, equipment, infraestructure and other assets that help with production

So a larger capital stock implies more factories, more equipment and assets in favor of Upper Equitorial.

The capital increase the productivity. so the growth rate will be smaller in lower equitorial