Examlex

Solved

Use a Saving-Investment Diagram to Explain What Happens to Saving,investment,and

question 79

Essay

Use a saving-investment diagram to explain what happens to saving,investment,and the real interest rate in each of the following scenarios in a closed economy.
(a)In an agricultural economy,great weather this year promises a bumper crop next year,leading citizens to expect higher income next year.
(b)Government regulations going into effect next year will reduce the marginal product of capital.
(c)The government increases lump-sum taxes on citizens.


Definitions:

Instinct

Natural, unchanging behaviors exhibited by animals in reaction to specific triggers.

Drive-Reduction

A theory of motivation that posits the reduction of physiological needs drives behavior towards achieving homeostasis.

Arousal Approach

a theory in psychology that focuses on how arousal levels affect performance, suggesting an optimal level of arousal for peak performance depending on the task complexity.

William McDougall

A psychologist known for his work on instinct theory and social psychology, advocating for the inclusion of innate tendencies in explaining behavior.

Related Questions