Sue Li asked in Social ScienceEconomics · 9 years ago

What is the oppurtunity cost of increasing investment to a fully employed economy?

a) A Fall in consumption

That's the answer. Why? Please explain. Thanks! :)

2 Answers

  • 9 years ago
    Favorite Answer

    This is because you are actually increasing labor costs and will be paying more to everyone by increasing investment in a country fully employed. This will ultimately lead to increase in overall consumption as people will have more money to spend..

    so the answer is fall in consumption because it occurs when there is reduction in investment. and is the next best alternative.

  • Anonymous
    9 years ago

    To increase investment, the country has to save more. Saving is a loanable fund for investment.To save more by given disposable income, people have to reduce consumption.

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