When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then ______________ resulting in a(n)________________ in investment.
A) rise; increase
B) fall; increase
C) fall; decrease
D) rise; decrease

Question

Quizplus · Accepted Answer

Classical macroeconomists argue that when consumers save more, the supply of loanable funds increases, leading to lower interest rates. Lower interest rates make borrowing cheaper, which encourages more investment.

When Consumers Start to Spend Less and Save More,classical Macroeconomists