2. The Solow growth model predicts that a decrease in the savings rate will reduce the standard of living in the long run". ? A decrease in the saving rate, 5, implies that savings per worker - for any given level of capital per worker - is lower. It therefore rotates the saving function downward. At the old steady state, investment per worker now falls short of the break-even rate of investment. Capital intensity, K/N, falls until the economy reaches a new steady state with lower canital and income oer worker. the statement is true