How can increased investment help a country achieve increased economic growth? What costs are involved?
Countries can profit from investment in much the same way that firms do. A country with substantial investment (both in human capital and physical capital) can produce a greater quantity of goods and services and will have higher income. The countries that tend to grow most rapidly are those that devote a larger share of their total output to private investment. Of course this choice entails an opportunity cost: Increased production of capital goods requires that a country forgo producing consumption goods.
You might also like to view...
Consumer surplus exists when a
A) person buys something with a marginal benefit less than what they paid. B) person buys something with a marginal benefit exactly what they paid. C) person buys something with a marginal benefit more than what they paid. D) producer sells something for more than it is worth. E) person buys something with a marginal cost less than what they paid.
Private investment expenditure, which is a flow, affects the stock of capital
a. True b. False
The split between the AFL and the CIO in 1935 had to do with
A. whether unions were to be organized along craft lines or industry lines. B. whether the unions were to pursue political goals or economic goals. C. communist influence in the American labor movement. D. corruption in the American labor movement.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1. B. P4 and Y2. C. P5 and Y1. D. P5 and Y2.