Giving up consumption today for consumption tomorrow accelerates economic growth by
A) having the economy produce no consumer goods.
B) increasing saving out of disposable income.
C) increasing the expected rate of inflation.
D) rapid expansion of the money supply.

Question

Quizplus · Accepted Answer

By abstaining from consumption today, individuals increase their saving out of disposable income, which in turn allows for more funds to be invested in capital goods and long-term projects. This leads to economic growth in the future as the investments generate returns and provide for increased production capacity. Choices A, C, and D are incorrect as they do not accurately describe the process of accelerating economic growth through deferred consumption.

Giving Up Consumption Today for Consumption Tomorrow Accelerates Economic Growth