Higher saving rates mean higher future growth rates because
A) the interest earned from savings gives you more wealth.
B) the banks have more money to distribute to their shareholders.
C) saving contributes to less investment, which yields a larger capital stock.
D) saving contributes to more investment, which yields a larger capital stock.

Question

Quizplus · Accepted Answer

Saving contributes to more investment, which yields a larger capital stock. This means that when individuals save more, the funds can be used for investment in capital goods, such as factories or equipment, which increases the economy's productive capacity and leads to higher economic growth rates in the future.

Higher Saving Rates Mean Higher Future Growth Rates Because