When Consumers Save Their Income Instead of Spending It

question 204

Multiple Choice

When consumers save their income instead of spending it,

• A) Say's Law cannot be true.
• B) there must be a mismatch between short-run aggregate supply and aggregate demand.
• C) the interest rate in the loanable funds market can match business investment spending with consumer savings.
• D) there must be less economic growth.
• E) all of the above are true.

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Definitions:

Merchandise Inventory

Goods or products that a company holds with the intention of selling them to customers for a profit.

Freight In

The cost associated with transporting goods from the supplier to the buyer, which is often added to the purchase cost of inventory.

Income From Operations

The profit generated from a company's regular business activities, excluding deductions of interest and taxes.

Multiple-Step Income Statements

A detailed financial statement that separates operating revenues and expenses from non-operating ones to calculate net income in several steps.