Question : Which of the following statements is false?
Option 1: A decrease in interest rates will increase investment.
Option 2: An increase in investment can cause an increase in output.
Option 3: An increase in the savings in an economy can cause an increase in current output.
Option 4: A decrease in taxes can cause an increase in output.
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Correct Answer: An increase in the savings in an economy can cause an increase in current output.
Solution : The correct option is An increase in the savings in an economy can cause an increase in current output .
Increased savings may, over time, result in more capital accumulation and investment, but not always in an immediate or direct rise in current production. Short-term savings growth may result in lower consumer spending, which might result in a decline in the economy's current production.
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