Classical Economists Believed That If Investment Were Greater Than Saving,the

question 53

Multiple Choice

Classical economists believed that if investment were greater than saving,the interest rate would _____,causing saving to _____ and investment to _____ until the two were equal.

• A)rise;decrease;increase
• B)fall;decrease;increase
• C)fall;increase;decrease
• D)rise;increase;decrease
• E)fall;increase;increase

---

Definitions:

Money Supply

The global sum of money available in an economy at a particular instance, including all forms of cash, coins, and the contents of checking and savings accounts.

Equilibrium Interest Rate

The interest rate at which the demand for funds equals the supply of funds in the financial markets, achieving a balance.

Aggregate-Demand Curve

A graphical representation of the total demand for goods and services within an economy at varying price levels.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability and growth.