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Author Question: An increase in production of one good will have zero opportunity cost only if the economy initially ... (Read 37 times)

bobbysung

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An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

What is the relationship between savings, capital formation, and consumption?



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Bigfoot1984

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Answer to Question 1

True

Answer to Question 2

One of the most important determinants of economic growth is the savings rate. If individuals wish to consume more in the future, they must consume less than their total income today. The savings from individuals become available to businesses that in turn use it for investment purposes in plant, equipment, and the expansion or start-up of businesses and such investment will increase future consumption possibilities.





 

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