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Explain why saving rises as the interest rate rises

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Reference no: EM133256146

1. According to classical economists, does Say's Law hold in a money economy? Explain your answer.

2. Explain why saving rises as the interest rate rises.

3. What does it mean to say that the economy is in a recessionary gap? In an inflationary gap? In long-run equilibrium?

4. Describe the relationship of the (actual) unemployment rate to the natural unemployment rate in each of the following economic states:

(a) arecessionarygap:

(b) aninflationarygap:_

(c) long-runequilibrium.:

Reference no: EM133256146

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