Suppose Americans decide to save more of their incomes. If banks lend this extra saving to businesses, which use the funds to build new factories, this leads to (faster or slower) growth in productivity because workers will have (more or less) equipment with which to work. a) True or False: Only factory owners will benefit from the higher productivity because they will receive a return on their additional investment.

b) True or False: Society receives a "free lunch" when it builds new factories.

a. False

b. False

Explanation:

Suppose Americans decide to save more of their incomes. If banks lend this extra saving to businesses, which use the funds to build new factories, this leads to faster growth in productivity because workers will have more equipment with which to work.

a. The benefits from higher productivity is received by every participants in the society, i.e., factory owners, in terms of increased profit, workers in terms of increased income (normally equal to value of marginal product).

b. The society doesn’t receive a “free lunch” because there is an inter-temporal trade-off between savings today and increased consumption tomorrow due to increased productivity.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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