When an economy shifts away from production of consumer goods and toward production of capital goods,for the average worker this trade-off means
A) a higher standard of living.
B) longer work hours.
C) a lower savings rate (as a percentage of income).
D) more leisure time.
E) more disposable income.

Question

Quizplus · Accepted Answer

When an economy shifts away from production of consumer goods and toward production of capital goods, it means that more resources are being allocated towards investment for the future. This may result in longer work hours for the average worker, as there is a greater need for labor in the production of capital goods. However, this shift may ultimately lead to a higher standard of living and increased disposable income in the future. A lower savings rate may not necessarily be a direct result of this trade-off. Leisure time may decrease due to longer work hours.

When an Economy Shifts Away from Production of Consumer Goods