Figure 9.1

-Refer to Figure 9.1. Suppose that households reduce saving to $7,000. Everything else held constant, consumption spending must now be

Question

Figure 9.1
 
-Refer to Figure 9.1. Suppose that households reduce saving to $7,000. Everything else held constant, consumption spending must now be

Quizplus · Accepted Answer

Given that households reduce saving to $7,000, and assuming the total income (or output) remains constant, the reduction in saving implies an increase in consumption. If saving decreases, the difference between total income and saving (which is consumption) must increase correspondingly. Without the specific figure (Figure 9.1) or additional data such as the initial level of saving and consumption, or the total income, it's challenging to directly calculate the new level of consumption. However, the correct answer is deduced based on the premise of the question.

Figure 9.1 -Refer to Figure 9.1. Suppose That Households Reduce Saving to Households