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19-11 0 A higher savings rate Suppose the original steady state is at E. dJed indno An increase in the savings ratio to s' E takes the economy to a new steady state at F. Capital per person K*K** and output per person Capital per person,k have increased... But the growth rate is unchanged...output and labour continue to grow at the rate n. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITYEconomics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 19-11 A higher savings rate Capital per person, k O u pt u t p e r p e rs o n , y y sy nk s'y An increase in the savings ratio to s' Capital per person and output per person have increased... But the growth rate is unchanged … output and labour continue to grow at the rate n. E y* k* Suppose the original steady state is at E. y** k** F takes the economy to a new steady state at F
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