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:

Connective Tissue

A type of tissue in the body that supports, binds together, and protects organs, consisting of cells embedded in an extracellular matrix.

Integumentary System

The body’s covering, including the skin and its nails, glands, hair, and other associated structures.

Exocrine Glands

Glands that release their secretions through ducts onto an epithelial surface, such as sweat, salivary, and digestive glands.

Protects the Body

A generalized term for biological systems or behaviors that defend the organism against disease, infection, or injury.