If for some reason households become increasingly thrifty, we could show this by
A) a downshift of the saving schedule.
B) an upward shift of the consumption schedule.
C) an upward shift of the saving schedule.
D) a movement down along a stable consumption function.

Question

Quizplus · Accepted Answer

An upward shift of the saving schedule indicates that households are saving more at every level of income. This suggests that they are becoming more thrifty and spending less on consumption. A downshift of the saving schedule, as mentioned in option A, would indicate the opposite - that households are saving less at every level of income. An upward shift of the consumption schedule, as in option B, would suggest that households are actually spending more at every level of income, which contradicts the premise of the question. Option D, a movement down along a stable consumption function, does not provide any information about changes in household thriftiness.

If for Some Reason Households Become Increasingly Thrifty, We Could