Policies to promote growth by increasing saving and investment work through
A)decreasing the supply of loanable funds,lowering the interest rate,raising the level of investment in physical capital.
B)increasing the supply of loanable funds,increasing the interest rate,raising the level of investment in physical capital.
C)increasing the supply of loanable funds,lowering the interest rate,lowering the level of investment in physical capital.
D)increasing the supply of loanable funds,lowering the interest rate,raising the level of investment in physical capital.

Question

Quizplus · Accepted Answer

Increasing the supply of loanable funds (through policies such as tax incentives for saving or reducing government borrowing) will lower the interest rate, making it cheaper for firms to borrow money to invest in physical capital. This will then lead to an increase in the level of investment in physical capital, promoting economic growth.

Policies to Promote Growth by Increasing Saving and Investment Work