Which of the following statements, if any, is correct for a nation which is producing only consumption and capital goods?
A)Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate.
B)Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.
C)There is no general relationship between the current division of output between consumer and capital goods and the future growth rate.
D)None of the above statements is correct.

Question

Quizplus · Accepted Answer

Producing more capital goods increases a nation's future growth rate as it leads to increased productivity and efficiency in the long run. However, just producing more consumer goods does not necessarily lead to an increase in future growth rate. Therefore, statement B is correct, statement A is incorrect, and statement C is ambiguous.

Which of the Following Statements, If Any, Is Correct for a Nation