In the Combined Solow-Romer Model, an Exogenous Increase in the Saving

Multiple Choice

In the combined Solow-Romer model, an exogenous increase in the saving rate:

A) immediately increases the growth rate of per capita output, which eventually slows to its previous rate.
B) immediately decreases the per capita output, but the growth rate does not change.
C) increases the growth rate of per capita income, but eventually the economy reaches a new steady-state level of per capita output.
D) immediately decreases the growth rate of per capita output, which eventually accelerates to a higher rate.
E) has no impact on the growth rate or level of per capita output.