Answered: Based on our discussion of the…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter3: Scarcity, Trade-offs, And Production Possibilities

Section: Chapter Questions

Problem 11P

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Question

Based on our discussion of the determinants of economic growth, answer the following questions:

• ’Devoting a larger share of national output to investment would help restore rapid economic

growth and rising living standards.’ Based on our discussion of the determinants of economic

growth, do you agree with the above statement? Explain why.

• What could the policymakers (i.e., government, central bank) do to increase the investments

in the economy?

• Do you think that increasing the saving rate could help to increase the economic growth?

Explain why.

• Do you think that increasing the saving rate is always helpful? I.e., could we increase the

saving rate to, say, 90 %? What could be some of the drawbacks of increasing the saving rate

to a very high level? Explain.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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