Households' ________ limit(s) firms' ability to invest in capital.

Question

Quizplus · Accepted Answer

Households' savings decisions directly impact firms' ability to invest in capital because savings are a primary source of the funds that banks lend to firms for investment purposes. When households save more, banks have more funds to lend, which can increase investment in capital. Conversely, when households save less, there is less capital available for firms to borrow and invest.

Households' ________ Limit(s) Firms' Ability to Invest in Capital