Classical economists concluded that
A)Spending leakages exceed spending injections.
B)Interest rates adjust such that business investment and consumer saving may equal.
C)The economy might experience persistent macro instability.
D)Investment will decrease in response to increased savings.

Question

Quizplus · Accepted Answer

Classical economists believed in the concept of "Say's Law," which states that supply creates its own demand. This means that the economy will automatically adjust to produce enough goods and services to meet the demand created by consumers and producers. In order for this to happen, classical economists believed that interest rates would adjust to balance the savings and investment decisions of consumers and businesses. Therefore, choice B is correct. The other choices are not accurate representations of classical economic theory.

Classical Economists Concluded That