Which of the following reflects an accurate economic chain of events?
A) Investment finances savings,which causes the economy to shrink.
B) Savings finances investment,which allows the economy to grow from a larger capital stock.
C) Savings finances future consumption,which allows future production to increase from a larger capital stock.
D) Investment finances future consumption,which allows incomes-and thus savings-to grow.
E) Higher interest rates increase savings,which causes consumption smoothing.
Correct Answer:
Verified
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