1. Suppose that society decided to reduce consumption and increase investment.

A. How would this change affect economic growth?

B. What groups in society would benefit from this change? What groups might be hurt?

2. What is the opportunity cost of investing in capital?Do you think a country can "overinvest" in capital? What is the opportunity cost of investing in human capital? Do you think a country can "overinvest" in human capital?Explain.

3. Suppose that an auto company owned entirely by German citizens opens a new factory in South Carolina.

a. What sort of foreign investment would this represent?

b. What would be the effect of this investment on the US GDP? Would the effect on the US GNP be larger or smaller?