Income, Saving and Investment

An individual can save and invest in order to increase his or her income in the future. A small decrease in consumption today can lead to a much greater amount of consumption in the future. When an individual saves and invests, the economy is transformed; instead of focusing on making TVs and DVDs, entrepreneurs start making tools and equipment. This reduces the amount of consumer goods produced in the present, but the new tools make workers more productive in the future. It is possible for every person to save now and enjoy a higher income in the future.

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