In Reply to: Clarification posted by Cindy Chan on November 6, 2001 at 16:23:06:
Professor Gabriel said that Keynes said that people spend out of their income and that this spending is habitual. What people don't spend is savings. This is not the same thing as investment. When he talked about investment he was talking about companies building new plants and hiring more people. It was a drop in investment that came before spending went down. Both spending and savings dropped if people had less money.
: There's something I wanted to clarify in class today. Is it because that humans are creatures of habit that we invest in the stock market in which money is cheapened in which investment rise and savings drop? If this is true, then how do we correlate this phenomenon to why the Great Depression occurred?
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