Question

If we save more and use it to build more physical capital, productivity will rise and we will have rising standards of living in the future. What is the opportunity cost of the future growth?

Answer 1

The opportunity cost of future growth is the potential loss of current consumption that could have been enjoyed if the savings were not used to build more physical capital.

Step-by-step explanation:

The opportunity cost of future growth is the potential loss of current consumption that could have been enjoyed if the savings were not used to build more physical capital. When individuals or society choose to save money instead of spending it on immediate needs, they are sacrificing the immediate benefits of consumption in order to invest in future productivity.

For example, if a person chooses to save money for a down payment on a house instead of using that money to go on a vacation, the opportunity cost of the future growth is the enjoyment and experiences they could have had on the vacation.