Question

What is the consequence of the growth of the population on the resources required for capital formation?

• A. Decrease in consumption expenditure and high savings
• B. Increase in consumption expenditure and low savings
• C. Low investment and low consumption expenditure
• D. High technology in production and low savings

Answer 1

The correct option is B

Increase in consumption expenditure and low savings

An economy faces shortage of capital because of increase in consumption expenditure; there is low rate of saving and low investments. It fina