Multiple choice

What will be one of the future consequences of an increase in the current level of consumption in India?

  1. Slower economic growth in the future

  2. Greater economic growth in the future

  3. No change in our economic growth rate

  4. Greater capital accumulation in the future

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A Correct answer
Explanation

This question tests the fundamental consumption-investment trade-off in growth theory. Higher current consumption means lower savings, which reduces resources available for investment and capital accumulation. Less investment today leads to lower capital stock tomorrow, resulting in slower economic growth in the future.