In the Classical View, If Desired Saving Exceeds Desired Investment

question 145

Multiple Choice

In the classical view, if desired saving exceeds desired investment

• A) government spending must fall.
• B) government spending must rise.
• C) the interest rate would decline.
• D) the interest rate would increase.

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Definitions:

Producing

The process of creating goods or services through the combination of labor, materials, and technology.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity, compared to another individual or group.

Constant Costs

Expenses that remain unchanged over a certain range of output or scale of operation.

Cost Ratios

Metrics or measures that compare costs to each other or to some base value to assess financial efficiency or performance.