The primary source of macro instability,when there is no government intervention and no foreign trade,is the relationship between
A)Investment and saving.
B)Saving and taxes.
C)Investment and consumption.
D)Consumption and saving.

Question

Quizplus · Accepted Answer

Investment and saving are key components of the economy and the relationship between the two can lead to macro instability. When investments exceed savings, it can lead to inflationary pressures, while when savings exceed investments, it can lead to unemployment and recession. These imbalances in the investment and saving relationship can occur even without government intervention or foreign trade. Therefore, A is the best choice.

The Primary Source of Macro Instability,when There Is No Government