Increased present saving
A) comes at the expense of reduced current investment.
B) comes at the expense of reduced current consumption.
C) can only occur if the government increases the amount of money in circulation.
D) is only possible if the economy is experiencing positive growth in real GDP.

Question

Quizplus · Accepted Answer

Increased present saving means that individuals are choosing to save more of their current income instead of spending it on current consumption. This automatically reduces current consumption, so option B is the correct choice. Option A is incorrect because increased saving does not necessarily mean reduced investment. Option C is incorrect because government policy is not always a requirement for increased savings. Option D is also incorrect because positive growth in real GDP is not a requirement for increased saving.

Increased Present Saving