Classical economists believed that if investment were greater than saving,the interest rate would _____,causing saving to _____ and investment to _____ until the two were equal.
A)rise;decrease;increase
B)fall;decrease;increase
C)fall;increase;decrease
D)rise;increase;decrease
E)fall;increase;increase

Question

Quizplus · Accepted Answer

Classical economists posited that if investment exceeded saving, the interest rate would rise. This increase in interest rates would encourage more people to save (due to higher returns on savings) and discourage investment (since borrowing costs are higher), leading to a decrease in investment and an increase in saving until equilibrium is reached where saving equals investment.

Classical Economists Believed That If Investment Were Greater Than Saving,the