In the classical view of the macroeconomy, the supply of savings is
A) unrelated to the interest rate.
B) inversely related to the interest rate.
C) positively related to the interest rate.
D) is fixed.

Question

Quizplus · Accepted Answer

In the classical view of the macroeconomy, the supply of savings is positively related to the interest rate. This means that as interest rates increase, people are more inclined to save rather than spend, because they can earn more from their savings.

In the Classical View of the Macroeconomy, the Supply of Savings