The following graph shows the saving curve (S) and the investment curve (I) for a small economy. Adjust the following gr

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The Following Graph Shows The Saving Curve S And The Investment Curve I For A Small Economy Adjust The Following Gr 1 (52.29 KiB) Viewed 48 times

The following graph shows the saving curve (S) and the investment curve (I) for a small economy. Adjust the following graph to show the effect of an increase in saving at any interest rate in this economy, which behaves according to the classical view, ? The Classical View of the Credit Market $ - INTEREST RATE DOLLARS SAVED OR INVESTED Which of the following is an argument by the classical economists? The lower the interest rate is, the higher the reward is for saving. O The higher the interest rate is, the more funds firms borrow and invest. O The higher the interest rate is, the fewer funds firms borrow and invest. The higher the interest rate is, the lower the reward is for saving. Step 2: The Effect of Saving on Total Expenditures The following table shows data for the economy before the increase in saving. Suppose that the increase in saving causes consumption to fall from $500 million to $475 million. Assume Say's law holds in this economy. Fill in the data for the economy after the increase in saving. Before Saving Increase $500 million After Saving Increase $475 million $ million $80 million Consumption (C) Investment (I) Government Purchases (G) Exports (EX) Imports (IM) $ million $300 million $600 million $800 million $600 million $800 million As a result of the increase in saving, total expenditures will