Answer: If Turkey increased its savings rate, in the long run there will be an increase in productivity and real GDP.
Explanation: Over time, if Turkey increased how they save their money, the country as a whole will be more productive and have more money. Real GDP increases when there is little or no inflation/deflation so the economy is doing better off. When the country can save funds without putting them into debt, inflation is less likely to occur.
If Turkey should increase its saving rate, in the long run productivity and real GDP per person increase.
Saving is characterized by a reduction in spending on goods and services. This leads to a fall in output and also a fall in profits. This reduces investment.
Savings helps to build capital. This would then cause technological progress in an economy, increasing production in the economy and specialization.
This ultimately leads to a growth in the economy in the long run.
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