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Any Change That Reduces Desired Saving Relative to Desired Investment

question 47

Multiple Choice

Any change that reduces desired saving relative to desired investment (for a given level of output) causes the real interest rate to ________ and shifts the IS curve ________.


Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the open market.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.

Demand

The willingness and ability of consumers to purchase goods or services at a given price level.

Supply

The complete quantity of a product or service that can be bought at a particular price point.

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