If, holding all else equal, the level of household saving decreased and the level of business investment spending increased, the level of economic activity would:
A) increase.
B) decrease.
C) remain unchanged.
D) either increase or decrease, depending on which change was larger.

Question

Quizplus · Accepted Answer

An increase in business investment spending directly contributes to economic activity by boosting demand for goods and services, leading to more production and potentially more employment. A decrease in household saving typically means more consumption, which also increases economic activity. Both factors together would lead to an increase in economic activity.

If, Holding All Else Equal, the Level of Household Saving