Consider - investment expenditures will be less than the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Consider, however, what happens when the funds from aggregate saving  exceed  the needs of all  borrowers in the economy. In this situation, real GDP will fall below its natural level because 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: investment expenditures will be less than the level of aggregate saving. This situation is illustrated in Figure 1 . Figure 1 Classical theory of interest rate adjustment in the money market...
View Full Document

This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Ask a homework question - tutors are online