Which One of the Following Is TRUE

question 49

Multiple Choice

Which one of the following is TRUE?

• A) Saving deters economic growth, because it takes money out of circulation.
• B) Saving enables economic growth by providing for investment in the capital stock.
• C) International comparisons have found no relationship between the rate of saving and the level of per capita real GDP.
• D) Economies with sophisticated credit markets, such as the United States, have no need for saving.

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Definitions:

Capital

The financial resources or assets owned by a business used to fund its operations and growth.

Temporary Account

An account used to track transactions for a single accounting period, closed at the end and its balances are transferred to permanent accounts.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use.

Capital

Capital refers to financial assets or resources that businesses use to fund their operations and invest in their growth, such as cash, machinery, and buildings.