Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,an Increase in the Value of the Value

question 61

Multiple Choice

Figure 15-1
-Refer to Figure 15-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

• A)AD₁ to AD₂.
• B)AD₂ to AD₁.
• C)point A to point B.
• D)point B to point A.

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Definitions:

Saving

The portion of income not spent on consumption but kept aside for future use, which may be invested to generate wealth.

Disposable Income

The amount households can devote to saving and spending once income taxes have been factored in.

Savings

The portion of disposable income not spent on consumption of consumer goods but accumulated or invested.

Disposable Income

The financial surplus households hold for spending and saving after income taxes have been applied.