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:

Express Condition

A clearly stated, specific requirement within a contract that must be met for the contract's promises to be enforceable.

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Failures to fulfill the terms agreed upon in a contract, leading to legal disputes and remedies.

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