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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Definitions:

Cash Account

A financial account where cash transactions are recorded, showing the cash inflows and outflows for a person or business.

Bank Reconciliation

The method of aligning the balance in a company's financial records for a cash account with the relevant details on a bank statement.

Deposits in Transit

Funds that have been received and recorded by a business but not yet processed or acknowledged by the bank.