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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