What is the relationship between savings, capital formation, and consumption?
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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Which of the following would an economist classify as physical capital?
a. 100 shares of IBM stock b. a $50 bill c. a credit card d. a lawyer's computer
If a country wants to promote future growth, it should
A) produce more capital goods today. B) produce more consumer goods today. C) produce only economic goods. D) produce only needed goods.
Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?
a. The effective price received by sellers is $0.40 per bottle less than it was before the tax. b. Sixty percent of the burden of the tax falls on sellers. c. This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume. d. All of the above are correct.
Which of the following is not considered a barrier to entry into a monopoly market?
A. an new product-type is offered. B. ownership of a key resource. C. government intervention. D. having a natural monopoly.