Pat Robertson, a TV evangelist and former Republican Party candidate for president, once said that "debt is an affront to God," so good Christians should not spend beyond their incomes.Indeed, Robertson wants Christians to save more.If more Americans, Christians as well as others, took his message seriously, how would we represent the result using a Keynesian macroeconomic model?
A)A downward movement along the consumption function
B)An upward movement along the consumption function
C)A downward shift of the consumption function
D)An upward shift of the consumption function

Question

Quizplus · Accepted Answer

According to the Keynesian macroeconomic model, an increase in savings leads to a decrease in consumption, which is represented by a downward shift of the consumption function. So, if more Americans, Christians as well as others, follow Pat Robertson's message and start saving more, it would lead to a decrease in consumption and a downward shift of the consumption function.

Pat Robertson, a TV Evangelist and Former Republican Party Candidate