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Questions and Answers
What is the primary goal of capital formation?
What is the primary goal of capital formation?
- Boost deficit financing
- Increase foreign trade
- Maximize current consumption
- Enhance the stock of real capital (correct)
Why is saving important for capital formation?
Why is saving important for capital formation?
- To boost current consumption
- To decrease deficit financing
- To increase foreign aid
- To invest in new capital goods (correct)
What happens if a society consumes all it produces and saves nothing?
What happens if a society consumes all it produces and saves nothing?
- Deficit financing increases
- Foreign capital inflow rises
- Investment in human capital rises
- Productive capacity of the economy falls (correct)
How does capital formation impact the future production of goods?
How does capital formation impact the future production of goods?
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Which activity requires society to cut down on present consumption for future benefits?
Which activity requires society to cut down on present consumption for future benefits?
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How does society's willingness to save impact capital formation?
How does society's willingness to save impact capital formation?
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What role does saving play in the process of capital formation?
What role does saving play in the process of capital formation?
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How does sacrificing current consumption benefit a society?
How does sacrificing current consumption benefit a society?
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What happens if no new capital goods are made for future production?
What happens if no new capital goods are made for future production?
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Why is far-sightedness important for society in terms of capital formation?
Why is far-sightedness important for society in terms of capital formation?
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