Suppose Households Save $30 Billion More at Each Level of Income

question 115

Multiple Choice

Suppose households save $30 billion more at each level of income, and the MPC = 0.9.How will the aggregate expenditure line be affected?  

• A) It will shift upward by $30 billion. 
• B) It will shift downward by $30 billion. 
• C) It will shift upward by $300 billion because of the multiplier. 
• D) It will shift downward by $300 billion because of the multiplier.

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Definitions:

Own Activities

Tasks or actions that an individual decides to undertake or is personally involved in.

Feelings Of Inferiority

A psychological condition where an individual perceives themselves as lesser or inadequate compared to others.

Psychosocial Development

A theory by Erik Erikson that emphasizes the impact of social experiences across the lifespan on individual development.

Sense Of Initiative

An individual’s ability to plan and execute tasks independently, often associated with confidence in taking actions.