Consider the Simplest Macro Model with a Constant Price Level

question 3

Multiple Choice

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

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

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Definitions:

Consignor

The manufacturer in a consigned inventory arrangement.

Consignment

A business arrangement where goods are left in the possession of another party to sell, but the owner retains ownership until the goods are sold.

Days' Sales

Refers to the ratio that indicates how many days worth of sales a company has in inventory, providing insight into inventory management efficiency.

Inventory

An accounting term for goods and materials that a business holds for the ultimate goal of resale or repair.