Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

A) economy A
B) economy B
C) They can be expected to grow at the same rate.
D) This is uncertain since growth is not influenced by the factors indicated in this example.

Question

Harshveer Dhaliwal · Accepted Answer

Final Answer : B, Explanation :  Economy B is likely to grow more rapidly if it has a higher level of investment compared to consumption, as investment in capital goods can lead to increased production capacity and economic growth in the future.

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