policy implications

• What is one way to increase economic growth?

  Increasing the savings ratio in the economy
• How does increasing the savings ratio affect investment?

  It increases the amount of investment available
• What role does technological progress play in economic growth?

  It allows more output from a single unit of capital
• Why might households in a poor country struggle to save money?

  They spend all their money to stay alive
• What is the result of low savings in a poor country?

  Low investment and low economic growth
• What is the cycle resulting from low savings in a poor country?

  • Low savings
  • Leads to low investment
  • Results in low economic growth
• What do economists agree is likely to secure higher growth rates?

  Increasing savings and investment
• Are increasing savings and investment sufficient for economic growth?

  No, investment can be wasted
• What are the necessary conditions for economic growth?

  • Increasing savings
  • Increasing investment
  • Avoiding waste of investment