Answered: explains the relationship between the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

explains the relationship between the supply of savings and the demand for capital investment for economic growth.

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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Step 1

Economic development is driven by improvements in the production of commodities and services in general. Greater consumer spending, increased international commerce, and companies increasing capital expenditures can all have an influence on the number of products and services produced in an economy.
In most cases, a portion of one's salary is set aside and invested. In a closed economy, the entire economy can only save as much as it earns. The economy as a whole could cut consumption expenditures in response to a particular level of income, increasing its inclination to save as a result.