The Classicals Believed That When Savings Exceeds Investment

question 236

Multiple Choice

The classicals believed that when savings exceeds investment,

• A)demand is reduced and the economy will go into a recession.
• B)the interest rate will decline and equate savings and investment.
• C)an increase in supply will encourage higher investment spending.
• D)if savings is greater than investment unemployment would reduce savings.

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Definitions:

EBIAT

Earnings Before Interest After Taxes, a financial metric that measures a company's profitability excluding interest expenses but after taxes.

Asset Intensity

A measure of how much a company relies on its physical and financial assets to generate revenue, with high asset intensity indicating significant dependence.

Depreciation

The gradual reduction in the value of an asset over time, often due to wear and tear.

Right Brain

The hemisphere of the brain associated with creative, intuitive, and holistic thought processes.