Which of the following is false?
a. Generally speaking, higher levels of saving will lead to higher levels of investment and capital formation and, therefore, to greater economic growth.
b. Economic growth rates tend to be higher in countries where the government enforces property rights
c. Investment alone does not guarantee economic growth, which hinges importantly on the quality and the type of investment as well.
d. None of the above are false; all are true.
d
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Why doesn't the Fed eliminate inflation from the economy entirely?
a. It is incapable of doing so. b. It believes that inflation is bad for the economy. c. It believes that the measured inflation rate understates the true rate of inflation. d. It recognizes that continuing inflation helps labor markets adjust more easily. e. If it did so, no one would get a raise in salary.
How might fiscal policy be used to correct an inflationary gap?
A. The exchange rate would be adjusted to discourage imports. B. The exchange rate would be adjusted to encourage imports. C. Government spending would be adjusted to reduce consumer spending. D. Business operations would be regulated by the government to become more efficient.