When a society decides to increase its quantity of physical capital,the society
A)can avoid the usual need to face trade-offs.
B)is apparently not very concerned about its rate of economic growth in the future.
C)is in effect deciding to consume fewer goods and services in the present.
D)is in effect deciding to save less of its current income in the present.

Question

Quizplus · Accepted Answer

Increasing the quantity of physical capital requires investment which means sacrificing some of the current consumption goods and services in the present. It requires saving some portion of the current income to invest in capital goods for future production. Therefore, the society is in effect deciding to consume fewer goods and services in the present. The other options are incorrect as trade-offs are still required, the rate of economic growth will actually increase in the future due to capital accumulation, and higher savings will lead to more investment and capital accumulation.

When a Society Decides to Increase Its Quantity of Physical