Within the AD/AS Model, If Consumers Increase Their Savings and Cut

question 179

Multiple Choice

Within the AD/AS model, if consumers increase their savings and cut back on their spending, the

• A) natural rate of unemployment will increase.
• B) real interest rate will decrease and, thereby, cushion the reduction in consumption spending.
• C) real interest rate will increase because of the higher rate of saving.
• D) long-run aggregate supply will decrease to restore equilibrium.

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Definitions:

Trade Discount

A reduction from the list price granted by a seller to a buyer in a commercial transaction, typically based on volume or early payment.

Trade Discount

A reduction in the list price granted by a seller to a buyer, often based on the quantity purchased or a trade relationship.

Trade Discount

A reduction in the listed price of goods or services offered to traders in the business-to-business market.

Trade Discount

A reduction from the list price of goods or services provided by a vendor to buyers in the trade.