Suppose Households Become More Future-Oriented and Decide to Save More

question 139

Multiple Choice

Suppose households become more future-oriented and decide to save more at each income level. All other things unchanged, this will

• A) shift the aggregate demand curve to the right.
• B) shift the aggregate demand curve to the left.
• C) not affect aggregate but rather aggregate supply because firms will now produce less.
• D) shift both the aggregate demand curve and the aggregate supply curve to the left.

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Definitions:

Production Function

A mathematical relationship expressing the maximum quantity of output that can be produced from a given set of inputs in a production process.

Plastic

Synthetic materials made from polymers that can be molded into shape while soft and then solidified, widely used in a vast range of products.

Wood

A hard, fibrous material made of the trunks and branches of trees, used for construction, making furniture, and other purposes.

Production Function

An equation or model that describes the relationship between the inputs used in production and the output of goods or services.