Decisions about how much of current output to devote to the production of capital goods determine, in part, the rate of growth of the economy.

Question

Quizplus · Accepted Answer

This statement is true. Investment in capital goods, such as machinery and equipment, increases a country's productive capacity and leads to economic growth over time. However, if too much output is devoted to capital goods, it may lead to a decrease in consumption and overall economic activity in the short run. Therefore, finding the optimal balance between consumption and investment is important for achieving sustained economic growth.

Decisions About How Much of Current Output to Devote to the Production