All else equal, an increase in savings will cause capital stock to:
A) increase.
B) decrease.
C) remain unchanged.
D) increase and then decrease.

Name: All else equal, an increase in savings will cause capital stock to: A) increase. B) decrease. C) remain unchanged. D) increase and then decrease.
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Question

Quizplus · Accepted Answer

An increase in savings will lead to an increase in investment spending, which in turn will lead to an increase in capital stock. Therefore, the correct answer is A.

All Else Equal, an Increase in Savings Will Cause Capital