The following graph shows the aggregate d economy. PRICE LEVEL 300 270 and (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (L) curves of an LRAS SRAS 240 AD 210 180 150 120 90 60 60 30 30 0 о 100 200 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in a recessionary gap long run equilibrium an inflation gapsian economists believe that the economy might move to point C via self regulation- get stuck at point A for an extended period -move to point C via govt intervention - move to point b via self regulation Grade It Now Save & Continue Continue without saving Attempts Average 2 1. Questioning the classical position Classical theorists maintain that Say's law holds in a money economy, arguing that funds saved must give rise to an equal amount of funds invested via variations in the interest rate. Keynes, however, argued that this is not necessarily the case. Which of the following best summarizes Keynes's critique of Say's law and its view of saving and investment? Check all that apply. Saving is inversely related to the interest rate. Investment is affected by many factors, some of which may be more influential than the interest rate. Saving is more responsive to changes in income than to changes in interest rates. Only investment is directly related to the interest rate.
The following graph shows the aggregate d economy. PRICE LEVEL 300 270 and (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (L) curves of an LRAS SRAS 240 AD 210 180 150 120 90 60 60 30 30 0 о 100 200 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in a recessionary gap long run equilibrium an inflation gapsian economists believe that the economy might move to point C via self regulation- get stuck at point A for an extended period -move to point C via govt intervention - move to point b via self regulation Grade It Now Save & Continue Continue without saving Attempts Average 2 1. Questioning the classical position Classical theorists maintain that Say's law holds in a money economy, arguing that funds saved must give rise to an equal amount of funds invested via variations in the interest rate. Keynes, however, argued that this is not necessarily the case. Which of the following best summarizes Keynes's critique of Say's law and its view of saving and investment? Check all that apply. Saving is inversely related to the interest rate. Investment is affected by many factors, some of which may be more influential than the interest rate. Saving is more responsive to changes in income than to changes in interest rates. Only investment is directly related to the interest rate.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following graph shows the aggregate d
economy.
PRICE LEVEL
300
270
and (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (L) curves of an
LRAS
SRAS
240
AD
210
180
150
120
90
60
60
30
30
0
о
100 200
300 400 500 600 700 800
900 1000
REAL GDP (Billions of dollars)
Point A on the graph shows the state of the economy in
a recessionary gap
long run equilibrium
an inflation gapsian economists believe that the economy might
move to point C via self regulation-
get stuck at point A for an extended period
-move to point C via govt intervention - move to point b via
self regulation
Grade It Now
Save & Continue
Continue without saving
Transcribed Image Text:Attempts
Average 2
1. Questioning the classical position
Classical theorists maintain that Say's law holds in a money economy, arguing that funds saved must give rise to an equal amount of funds invested
via variations in the interest rate. Keynes, however, argued that this is not necessarily the case. Which of the following best summarizes Keynes's
critique of Say's law and its view of saving and investment? Check all that apply.
Saving is inversely related to the interest rate.
Investment is affected by many factors, some of which may be more influential than the interest rate.
Saving is more responsive to changes in income than to changes in interest rates.
Only investment is directly related to the interest rate.
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