« previous next »

Author Question: Saving is a leakage from the circular flow. Why didn't the classical economists think saving might ... (Read 75 times)

Diane

  • Hero Member
  • *****
  • Posts: 576
on: Jun 29, 2018
Saving is a leakage from the circular flow. Why didn't the classical economists think saving might cause consumption expenditures to fall short of total output?
 
  What will be an ideal response?

Question 2

Refer to the above figure. A unit tax has been placed on the good. The producer pays what amount of the tax?
 
  A) none of the tax
  B) P2 - P0
  C) P2 - P1
  D) P1 - P0


lorealeza

  • Sr. Member
  • ****
  • Posts: 345
Reply #1 on: Jun 29, 2018
Answer to Question 1

The classical economists believed that each dollar saved would be invested by firms so that the leakage of saving would be exactly matched by an injection of investment spending. The interest rate would adjust to ensure that saving equaled investment.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

Did you know?

After 5 years of being diagnosed with rheumatoid arthritis, one every three patients will no longer be able to work.

Did you know?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

(a) Yucca baccata in full flower; (b) a Yucca moth, Tegeticula planella, ovipositing on a Yucca flow (a) Yucca baccata in full flower; (b) a Yucca moth, Tegeticula planella, ovipositing on a Yucca flow
Benign prostatic hyperplasia. The condition results when an inner capsule of nonfunctional prostate Benign prostatic hyperplasia. The condition results when an inner capsule of nonfunctional prostate
Heavy fuel droplets separate as they flow around an abrupt bend in an intake manifold. Heavy fuel droplets separate as they flow around an abrupt bend in an intake manifold.
Diagram of Cross Flow Air Dryer Diagram of Cross Flow Air Dryer
A Classical Conditioning Procedure Outside the Laboratory A Classical Conditioning Procedure Outside the Laboratory
Blood Flow Through Capillaries Blood Flow Through Capillaries
Video: Introduction to Sickle Cell Anemia

For a complete list of videos, visit our video library