Asked by nikki scalera on May 18, 2024
Verified
Keynes believed that when savings exceeds investment
A) the interest rate will decline and equate savings and investment.
B) excessive savings will reduce demand and result in unemployment.
C) wage rates would decline reducing excess savings.
D) prices would increase causing savings to be reduceD.
Savings Exceeds Investment
Describes a situation in which the amount of income saved by individuals or entities surpasses the amount being invested, which can indicate caution or a lack of attractive investment opportunities.
Keynes
John Maynard Keynes was a British economist whose ideas, known as Keynesian economics, had a major impact on modern economic and political theory and on fiscal policies of governments.
Demand
The desire and ability of consumers to purchase goods or services at a given price.
- Review the effectiveness of government interference in resolving economic turbulence through the lens of Keynesian economics.
Verified Answer
CR
Christopher RogersMay 24, 2024
Final Answer :
B
Explanation :
Keynes believed that if savings exceeds investment, it would result in a reduction in demand which would lead to unemployment. This is because if people save more, they are spending less which reduces the demand for goods and services, leading to a decrease in business profits and eventually to layoffs and unemployment.
Learning Objectives
- Review the effectiveness of government interference in resolving economic turbulence through the lens of Keynesian economics.