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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If two nations engage in trade, they will always share equally the gains achieved through specialization
Indicate whether the statement is true or false
Which of the following will increase economic freedom?
a. an increase in tariff rates imposed on imported goods b. an increase in government spending as a share of the economy c. elimination of regulations that make it difficult to start a business d. an increase in the rate of inflation and its variability