Question

Savings are essential for capital formation.

Options

• True

• False

Answer 1

This statement is True.

Explanation:

Savings are essential for capital formation because they represent the income that is not consumed and can be used for investment. These savings can be channeled into productive uses, such as purchasing machinery, equipment, or infrastructure, which are necessary for capital formation. Without savings, limited resources would be available for investment, and capital formation would be constrained.