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So the interest rate r in equilibrium will be equal to the marginal efficiency of capital r '. Rather than asap finance with r and r ' as separate variables, we can assume that they are equal and let the single variable r denote their common value. The investment schedule i r shows how much investment is possible with asap finance return of at least r. Saving is the excess of deferred over anticipated consumption, and its dependence on income is much as described by Keynes see The General Theorybut in classical theory asap finance an increasing function continue reading r.

The dependence of s on income y was not relevant to classical concerns prior to the development of theories of unemployment. The rate of interest is given by the intersection of the solid red saving curve with the blue asap finance schedule. But so long as the investment schedule is almost vertical, a change in income leading in extreme cases to the broken red saving curve will make little difference to the interest rate.

In some cases the analysis will just click for source less simple. The introduction of a new technique, leading to demand for new forms of capital, will shift the step to the right and reduce asap finance steepness. In the case of extraordinary spending in time of war the government may wish to borrow more than the public would be willing to lend at a normal interest rate.

If the dotted red curve started negative and showed no tendency to increase with rthen the government would be asap finance to buy what the public was unwilling to sell at any price.

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