Suppose Canadians decide to save more of their incomes. If banks lend this extra saving to businesses, which use the funds to build new factories, how might this lead to faster growth in productivity? The same number of workers will have more equipment to work with. More workers will be hired to work with the new equipment.
Added by Chris E.
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Banks, in turn, lend out these savings to businesses. This increased availability of funds for borrowing can lead to lower interest rates, making it more attractive for businesses to invest in capital expenditures. Show more…
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