In the classical model,an increase in saving is assumed to increase

Question

Quizplus · Accepted Answer

According to the classical model, an increase in saving will lead to an increase in the supply of loanable funds. This is because when people save more, banks have more money to lend out, increasing the supply of loanable funds. The increase in supply will lead to a decrease in interest rates, as the interest rate is the price of borrowing funds. Therefore, choice B is the best answer.

In the Classical Model,an Increase in Saving Is Assumed to Increase