Which of the following statements concerning saving is true?
A. A country's saving rate is unrelated to its growth rate.
B. A country's growth rate is unrelated to its national income.
C. An increase in the rate of saving will lead to a reduction in consumption in the short run and in the long run.
D. An increase in the rate of saving decreases gross domestic income by reducing current consumption but increases current and future gross domestic income through investment in capital goods.
Ans: D. An increase in the rate of saving decreases gross domestic income by reducing current consumption but increases current and future gross domestic income through investment in capital goods.
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The term "depository institution" refers to
A) savings and loan associations only. B) commercial banks, credit unions, and savings and loan associations. C) credit unions only. D) commercial banks only.
The social costs of an activity are greater than the private costs of the activity when
A) a person does not pay all costs associated with a particular resource-using activity. B) the internal costs of the resource-using activity are less than the external costs of the activity. C) the internal costs of the resource-using activity are positive. D) the external costs of the resource-using activity are zero.