According to the circular flow of income and output, saving causes
A) total output to fall.
B) consumption expenditures and total output to fall.
C) consumption expenditures to fall short of total output.
D) investment spending to fall.

Question

Quizplus · Accepted Answer

Savings in the circular flow of income and output model represent income not used for consumption. This leads to consumption expenditures being less than the total output, as the saved portion of income is not immediately spent on goods and services.

According to the Circular Flow of Income and Output, Saving