Which of the following is consistent with Keynes's view of Say's law?
A) Saving increases by $3 billion,consumption falls by $3 billion,and investment rises by $3 billion.
B) Consumption rises by $3 billion and saving rises by more than $3 billion.
C) Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by something less than $3 billion.
D) Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by $6 billion.
E) none of the above

Question

Quizplus · Accepted Answer

According to Keynes's view of Say's law, saving and investment are not the same thing, and due to the uncertainty and liquidity preference of households and firms, it is possible for saved income to not immediately find its way into investment. Therefore, the correct choice would reflect an increase in saving and a decrease in consumption, with investment rising by something less than the amount of increased saving. Choice C fits this description, where saving increases by $3 billion, consumption falls by $3 billion, and investment rises by something less than $3 billion.

Which of the Following Is Consistent with Keynes's View of Say's