How does the classical position on saving differ from Keynes's position?
A) Classical position: people save more at lower interest rates.Keynes's position: people save less at lower interest rates.
B) Classical position: changes in the interest rate are irrelevant to saving decisions.Keynes's position: saving is directly related to the interest rate.
C) Classical position: saving is directly related to the interest rate.Keynes's position: at times,saving may be inversely related to the interest rate.
D) Classical position: saving can be inversely related to the interest rate.Keynes's position: consumption rises as saving rises.
E) none of the above

Question

Quizplus · Accepted Answer

The classical position holds that saving is directly related to the interest rate, whereas Keynes's position suggests that saving may be inversely related to the interest rate at times. This means that as interest rates rise, people may save more, whereas lower interest rates may lead people to save less. However, Keynes also suggested that saving can have a negative impact on consumption, which is different from the classical position.

How Does the Classical Position on Saving Differ from Keynes's