In the long run, economic growth can be expected to lead to
I. increases in consumption.
II. increases in the capital stock.
III. increases in the savings rate.
IV. outward shifts in the production possibilities curve.

Question

In the long run, economic growth can be expected to lead to 
I. increases in consumption.
II. increases in the capital stock.
III. increases in the savings rate.
IV. outward shifts in the production possibilities curve.

Quizplus · Accepted Answer

Economic growth leads to increases in consumption as people have more income to spend. It also leads to increases in the capital stock as firms invest in new machinery and equipment to expand production capacity. In addition, economic growth leads to outward shifts in the production possibilities curve as more goods and services can be produced with the same resources. However, there is no guarantee that economic growth will lead to increases in the savings rate, as this may be influenced by factors such as cultural norms and government policies. Therefore, option C, which includes I, II, and IV, is the best choice.

In the Long Run, Economic Growth Can Be Expected to Lead