Final answer:
Investing in capital goods typically results in positive impacts on future consumption by increasing a society's productive capacity and output. This investment parallels individual decisions to invest in education for higher future income, weighted against the cost of borrowing. Economic optimism generally encourages such investments, while pessimism can lead to reduced consumption and greater savings.
Step-by-step explanation:
When a society chooses to forgo current consumption to invest in capital goods, it typically impacts future consumption positively. By investing in capital goods, a society is increasing its productive capacity, which can lead to greater efficiency and higher output in the future. This investment in the productive base allows for higher levels of future consumption as the gains from increased production can be distributed in various forms such as higher incomes, lower prices, or more products and services.
In the context of intertemporal choices, individuals might sacrifice current consumption for future gains, as in the case of pursuing higher education. The decision to forgo a current salary to invest time and resources into obtaining a degree is based on the expectation of higher future income, despite the potential burden of student loans and interest payments. This is analogous to a society's investment in capital goods, expecting future economic growth and increased consumption potential.
Similar to how personal wealth and credit can affect individual consumption habits, a society's overall wealth and access to credit can impact its ability to invest in capital goods. Since investments are often made with an eye towards future gains, economic optimism can lead to greater investments and conversely, a pessimistic outlook can lead to reduced consumption and increased savings.