Question 47
Economic Growth and DevelopmentWhich of the following methods is most likely to lead to an increased rate of growth in the national economy?
- A.An increase in wages and profits
- B.An increase in consumer demand
- C.A greater fraction of the National Product going into investment
- D.A continuous rise in bank loans.
Show the answer and explanation
Answer: C (A greater fraction of the National Product going into investment)
Explanation
Investing more of national output adds to the stock of capital, which raises the economy's capacity to produce and so its growth rate.