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    tradeoff between current consumption and savings

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    Economists agree that an economy cannot grow without savings. This means forgoing current consumption, saving, and investing in capital goods. Using the production possibility frontier curve, explain the tradeoff between current consumption and savings and how this impacts economic growth.

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    Solution Preview

    A PPF can be used to demonstrate the trade off between any two goods. You may be used to seeing them used to show how much of two goods an economy can produce. But we can just as easily place consumption on one axis ...

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    Tradeoff between current consumption and savings and how this effects economic growth.

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