If a larger fraction of GDP is devoted to ___________, nation's capital stock will grow faster and the aggregate supply curve will shift more quickly to the right, accelerating growth.
A)investments
B)consumption
C)trade
D)none of these

Question

Quizplus · Accepted Answer

When a larger fraction of GDP is devoted to investments, it means that more money is being allocated towards building and improving capital stock such as factories, equipment, and infrastructure. This leads to higher productivity, increased production, and ultimately economic growth. As the capital stock grows, the aggregate supply curve shifts to the right, allowing the economy to produce more output at a lower cost. Therefore, investments are essential to accelerate economic growth.

If a Larger Fraction of GDP Is Devoted to ___________