The Fact That the Observed Link Between Saving and Investment

question 59

Multiple Choice

The fact that the observed link between saving and investment in Canada's open economy is weak implies that policies like the Registered Retirement Savings Plan (RRSP) may stimulate

• A) savings and will necessarily produce higher economic growth.
• B) savings and higher average labour productivity growth.
• C) savings but will not necessarily produce higher rates of investment.
• D) investment but will not necessarily produce higher private savings.
• E) investment but will not necessarily produce higher public savings.

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Definitions:

Economic Profit

The surplus remaining after subtracting total costs, including both explicit and implicit costs, from total revenues, indicating the profitability of a business beyond breaking even.

Self-Interest

Refers to actions that elicit personal benefit or advantage, often guiding economic decision-making and behavior in the context of rational choice theory.

Consumer Sovereignty

The determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy; consumers’ direction of production through their dollar votes.

Dollar Votes

The “votes” that consumers cast for the production of preferred products when they purchase those products rather than the alternatives that were also available.