In the flexible-price model, the level of ________ determined the level of _________, and the strength of __________ demand determined the interest rate.
A) savings; investment; investment
B) investment; savings; investment
C) savings; investment; consumption
D) investment; savings; consumption

Question

Quizplus · Accepted Answer

In the flexible-price model, the level of savings determines the level of investment, as savings provide the funds available for investment. The strength of investment demand then determines the interest rate, as higher demand for investment funds leads to higher interest rates.

In the Flexible-Price Model, the Level of ________ Determined the Level