Within the Framework of the AD-AS Model, an Increase in Savings

question 85

Multiple Choice

Within the framework of the AD-AS model, an increase in savings by households will

• A) increase the supply of loanable funds and reduce interest rates.
• B) be offset by a decrease in savings by businesses.
• C) cause long-run fluctuations in the rate of consumption.
• D) result in a decline in aggregate demand, output, and employment.

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Definitions:

Adaptability

The ability to adjust to new conditions, changes, or environments effectively.

Cohesion

The act of forming a united whole, often used to describe the sense of unity and togetherness within a group or team.

Communication

The act of exchanging information, ideas, or feelings between two or more entities, through various channels and means.

Level of Conversation

The depth and complexity of dialogue or discourse, ranging from superficial small talk to deep, meaningful exchanges.