From the long-run perspective of economic growth,saving
A)Threatens growth because of the paradox of thrift.
B)Causes the long-run aggregate supply curve to shift to the left.
C)Is a basic source of investment financing.
D)Shifts the production possibilities curve inwarD.Investment,which is critical to capital formation,is funded through savings.

Question

Quizplus · Accepted Answer

Savings is a basic source of investment financing and is critical to capital formation, which is essential for economic growth. Investment requires the use of resources that could otherwise be used for consumption, and savings provide the resources to finance investment. Thus, saving is vital for promoting economic growth in the long run. Therefore, option C is the correct answer. Option A is incorrect because the paradox of thrift suggests that if everyone saves more, aggregate demand declines, and output might decrease in the short run, but it's not a long-term concern for economic growth. Option B is incorrect because saving doesn't cause the long-run aggregate supply curve to shift to the left. Option D is incorrect because saving doesn't shift the production possibilities curve inward; instead, it facilitates investment and shift the curve outward.

From the Long-Run Perspective of Economic Growth,saving