When saving declines,the quantity of investment will ________,and therefore aggregate demand will ________.
A) increase; increase
B) decrease; decrease
C) decrease; increase
D) increase; decrease
E) remain unchanged; decrease

Question

Quizplus · Accepted Answer

When saving declines, there is less money available for investment. This leads to a decrease in the quantity of investment, which in turn leads to a decrease in aggregate demand. The opposite of this scenario would be an increase in saving, which would lead to an increase in investment and an increase in aggregate demand.

When Saving Declines,the Quantity of Investment Will ________,And Therefore Aggregate