Question 45
Economic Growth and DevelopmentA society which forgoes present consumption
- A.is forced to do so because of excessive consumption within the country in the past
- B.is devoting new resources to new capital formation
- C.is merely devoting resources to the replacement of capital
- D.expects to consume only that amount tomorrow which was forgone today.
Show the answer and explanation
Answer: B (is devoting new resources to new capital formation)
Explanation
Resources not used for consumption today can be used to build new capital goods, which raise future output.