Question

Suppose Americans decide to save less of their incomes, reducing the ability of banks to lend to businesses. With less funds available to businesses, workers will (less\more) have capital equipment with which to work. This leads to (slower\faster) growth in productivity. Workers will (lose\benefit) from the change in productivity growth because they will produce and earn(less\more) .

True or False: Society can receive a “free lunch” when it builds new factories.

False\True

Answer 1

ANSWER:

SINCE AMERICANS ARE SAVING LESS , WHICH MEANS THERE WILL BE LESS MONEY IN THE BANKS AND WITH LESS MONEY AVAILABLE , THERE WILL BE LESS LENDING AND BUSINESSES WILL HAVE LESS CAPITAL EQUIPMENT TO WORK WITH DUE TO LESS FUNDS AVAILABLE AND DUE TO THIS THE GROWTH IN PRODUCTIVITY WILL BE SLOWER AS THERE AREN'T ENOUGH FUNDS AVAILABLE TO WORK WITH AND WITH THIS CHANGE IN PRODUCTIVITY THE PER CAPITA PRODUCTION WILL GO DOWN WHICH MEANS THAT THE WORKERS WILL LOOSE FROM IT DUE TO LESS PRODUCTION AND SUBSEQUENTLY LESS EARNINGS AND LOSS WILL BURDEN WORKERS, ENTREPRENEURS AS WELL AS INDIVIDUALS.

SOCIETY IS NOT GETTING A FREE LUNCH AS THERE IS A TRADE OFF BECAUSE WHEN WE SAVE LESS WHICH MEANS WE ARE GIVING PRIORITY TO CURRENT NEEDS THEN TO FUTURE NEEDS AND DUE TO THIS THE PRODUCTIVITY WILL NOT IMPROVE AND LETS JUST IMAGINE IF PEOPLE WERE SAVING INSTEAD OF SPENDING THEN SAVING WOULD BE A TRADE OFF FOR BETTER FUTURE AND IMPROVEMNET IN ECONOMIC PRODUCTIVITY.