From the long-run perspective of economic growth,saving
A)Threatens growth because of the paradox of thrift.
B)Causes the long-run aggregate supply curve to shift to the left.
C)Is a basic source of investment financing.
D)Shifts the production possibilities curve inward.

Question

Quizplus · Accepted Answer

Saving is a basic source of investment financing, which in turn contributes to economic growth by increasing the capital stock and productivity. Therefore, saving is essential for long-run economic growth. Option A is incorrect because the paradox of thrift suggests that increased saving in the short run could lead to a decrease in aggregate demand, but it does not threaten long-run growth. Option B is incorrect because saving does not cause the long-run aggregate supply curve to shift. Option D is incorrect because saving does not shift the production possibilities curve inward.

From the Long-Run Perspective of Economic Growth,saving