Why do Classical Economists believe all savings will be invested?
A) Supply and demand.
B) Because of the circular flow.
C) Because that is what has always happened throughout history.
D) Because people only save money in order to invest it.

Question

Quizplus · Accepted Answer

Classical Economists believe that all savings will be invested due to the principle of supply and demand. They argue that the interest rate will adjust to ensure that all savings are channeled into investment, as savers supply funds and investors demand them.

Why Do Classical Economists Believe All Savings Will Be Invested