Why Is the Effect of Saving So Controversial to Economists

question 67

Multiple Choice

Why is the effect of saving so controversial to economists?

• A) Increased saving always has an unambiguously positive effect on the economy
• B) Increased saving always has an unambiguously negative effect on the economy
• C) Increased saving may hurt the economy in the short run but help it in the long run
• D) Decreased saving my hurt the economy in the short run but help it in the long run
• E) Because different schools of economic thought use different definitions

---

Definitions:

Marginal Resource Cost

The additional cost incurred by using one more unit of a resource.

Upsloping Labor Supply Curve

A graphical representation indicating that as wages increase, the quantity of labor supplied also increases.

MRC Curve

The Marginal Resource Cost curve, representing the additional cost incurred by employing one more unit of a resource in production.

Monopsonist's Wage Cost

The cost to a monopsonist (a single buyer in a market) of paying for labor, influenced by their power to set wages due to lack of competition.