Saving is not a problem in the classical model because
A)the classical economists assume that saving was beneficial to people for retirement.
B)saving would be spent by consumers eventually.
C)interest rates are flexible, and savings were channeled into investment.
D)savers and investors are the same people.

Question

Quizplus · Accepted Answer

In the classical model, interest rates are flexible and savings are channeled into investment, so there is no difficulty in saving. Additionally, classical economists assume that saving is beneficial for people in retirement. Option A is somewhat related but does not fully answer the question. Option B is incorrect because it assumes that saving will be spent eventually, which is not always the case. Option D is also incorrect because savers and investors can be different people.

Saving Is Not a Problem in the Classical Model Because