Consider a Simple Macro Model with a Constant Price Level

question 144

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.In such a model,a downward shift of the saving function causes equilibrium national income to

• A)fall because the AE function shifts downward simultaneously.
• B)rise because the AE function shifts upward simultaneously.
• C)remain constant but consist of more consumption and less investment.
• D)remain constant but consist of less consumption and more investment.
• E)remain constant because it does not affect desired aggregate expenditure.

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Liberally Administered

A principle or policy applied in a manner that is flexible, generous, or not strictly in accordance with strict rules or formalities.

Aggrieved Party

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An agreement where the original terms have been altered or amended by the parties involved, following mutual consent.

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The value (such as money, a promise, or a service) that is given by both parties in a contract making the agreement legally binding.