A higher rate of saving should lead to
A) higher current consumption.
B) less growth.
C) more investment, higher capital growth, and more future consumption.
D) a higher price level and reduced future consumption.

Question

Quizplus · Accepted Answer

A higher rate of saving means households and firms are consuming less, resulting in an increase in investment. More investment leads to higher capital growth and productivity, which leads to more future consumption. Therefore, choice C is the correct answer. Choice A is incorrect because a higher rate of saving implies lower current consumption. Choice B is incorrect because a higher rate of saving leads to more investment, and investment is a key driver of economic growth. Choice D is incorrect because a higher rate of saving would lead to a lower price level due to reduced demand for goods and services.

A Higher Rate of Saving Should Lead to