Consider the Long-Run Theory of Investment,saving,and Growth

question 120

Multiple Choice

Consider the long-run theory of investment,saving,and growth.Which of the following statements concerning national saving is true?

• A)A country's saving rate is unrelated to its growth rate.
• B)An increase in the rate of saving will lead to a reduction in consumption and therefore to both a short-run and a long-run decrease in national income.
• C)An increase in the rate of saving will cause an immediate increase in national income,but may cause a drop in national income in the long-run.
• D)An increase in the rate of saving will always be offset by a reduction in private investment.
• E)An increase in the rate of saving will lead to a short-run reduction in national income,but to higher economic growth in the long run.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity of it that consumers are willing to purchase at different prices.

Price Sensitivity

The degree to which the demand for a product is affected by changes in its price.

Vertical

Refers to the integration of multiple stages of production and distribution within the same company.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that buyers are willing to purchase.