Keynes held that saving is more responsive to changes in income than to changes in the interest rate.

Question

Quizplus · Accepted Answer

This statement accurately reflects Keynes' belief that saving is primarily driven by income, rather than changes in the interest rate. He argued that if people's income increased, they would save a higher proportion of it, regardless of whether interest rates were high or low. Conversely, if their income decreased, they would save less, again irrespective of the prevailing interest rate. However, other economists have challenged Keynes' assumption, arguing that interest rates do play a significant role in determining people's saving behavior.

Keynes Held That Saving Is More Responsive to Changes in Income