Final answer:
Increasing a nation's saving rate allows for more investment in productivity-enhancing assets, leading to growth in both productivity and future real GDP. This investment in physical and human capital, as well as technological advancement, is key to sustained economic growth.
Step-by-step explanation:
When a country increases its saving rate, it is essentially setting aside more resources that could be invested in physical capital, human capital, and technological innovation. These investments are crucial for enhancing a country's productivity.
Moreover, greater productivity is one of the main drivers of increases in real GDP over time. By investing in productivity improvements, such as better machinery, more education, or improved technologies, workers can produce more goods and services.
This increase in output per worker (productivity) leads to a rise in real GDP, assuming the economy can absorb and efficiently use the increased output.
The growth of real GDP per capita is closely linked to the growth in productivity; although more people working will increase GDP, it does not necessarily increase the output per worker unless accompanied by capital increases.
Over the long term, the continuous growth of real GDP per capita is driven by increased worker productivity through the accumulation of more and better capital and advancements in technology.
Therefore, when a country increases its saving rate and then invests those savings effectively, we can expect both its future productivity and future real GDP to increase.
The answer is option (a): a country that increases its saving rate increases its future productivity and future real GDP.